It is an exchange-traded note linked to an index that rolls daily between first- and second-month VIX futures. It gives exposure to stock market volatility, and it is structured to track futures rather than the spot VIX.

It suits short-term investors who hedge or bet on rising volatility during market selloffs while understanding roll-over losses and issuer credit risk.

It is a passively managed (index-tracking) product run by iPath.

The issuer sells it as a debt security designed to track an index that rolls daily between first- and second-month VIX futures. Because it is linked to futures rather than the spot VIX, its value tends to erode steadily through the roll process when the futures curve is in contango.

• An ETN structure linked to short-term VIX futures
• Volatility exposure that rolls over daily

Assets under management (AUM) are $512.0M, and the expense ratio is 0.89% per year.

Unlike equity ETFs, it is linked to volatility futures and can surge during market selloffs, but in ordinary times it clearly tends to lose value over the long run because of roll-over losses.

Volatility futures react sharply to stock market volatility. They can spike when markets fall and fear grows, but when markets are stable or rising gently, roll-over losses on the futures tend to erode value steadily.

Short-term hedging money tends to flow into volatility ETNs when concerns about market volatility rise, and when volatility subsides, money can leave quickly alongside the decline in value.

Its strength is exposure to volatility spikes during market selloffs, while roll-over losses in ordinary times, issuer credit risk and high fees are its weaknesses.

PHDG, QGRD and QQQY shown in the table are ETFs with different strategies, such as downside hedging, defined risk and weekly distributions, so their way of gaining exposure differs. For more direct exposure to volatility, you can also compare the volatility futures ETF VIXY, the double-leveraged volatility ETF UVXY and the mid-term volatility ETF VIXM. They differ in maturity structure, leverage and fees, so it is best to choose according to your short-term objective.

Here are the points to review before investing in VXX. As a volatility ETN, it is important to check roll-over losses, issuer credit risk, unsuitability for long-term holding and the fee level in advance.

In ordinary times, when markets are stable or rising gently, futures roll-over losses steadily reduce its value, making it unsuitable for long-term holding, and given the nature of the ETN structure, there is also a risk of principal loss if the issuer defaults. The difficulty of timing a volatility spike is another risk factor.

This ETN suits short-term investors who hedge or bet on rising volatility during market selloffs while understanding roll-over losses and issuer credit risk. It is not suitable for long-term investing, and volatility ETNs such as VXX can be used as a short-term volatility hedge.