About VIX Futures Contracts
What are VIX futures contracts?
VIX futures contracts give investors access to tradable S&P 500 volatility by providing a way to take a view on future values of the VIX. The price at which a VIX futures contract trades reflects the market’s view of the value of the VIX on the expiration date of the VIX futures contract.
What is contango?
The VIX futures market is said to be in contango when futures contracts with longer expirations have higher prices than those with shorter expirations. The VIX futures market has commonly been in contango, especially during periods when realized volatility is at average or below average levels.
What is backwardation?
The VIX futures market is said to be in backwardation when futures contracts with longer expirations are less expensive than those with shorter expirations. Backwardation has been most prevalent after a surge in realized volatility and has historically occurred much less frequently than contango.
"Standard & Poor's,®" "S&P,®" "S&P 500,®" "Standard & Poor's 500,®" "S&P 500® VIX® Short-Term Futures IndexTM" and "S&P 500® VIX® Mid-Term Futures IndexTM" are products of S&P Dow Jones Indices LLC and its affiliates and have been licensed for use by ProShares. "S&P®" is a registered trademark of Standard & Poor's Financial Services LLC ("S&P") and "Dow Jones®" is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones") and have been licensed for use by S&P Dow Jones Indices LLC and its affiliates. "VIX®" is a trademark of the Chicago Board Options Exchange, Incorporated ("Cboe") and has been licensed for use by S&P Dow Jones Indices LLC. ProShares have not been passed on by S&P Dow Jones Indices, Cboe or their respective affiliates as to their legality or suitability. ProShares are not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices, Cboe or their respective affiliates, and they make no representation regarding the advisability of investing in ProShares. THESE ENTITIES AND THEIR AFFILIATES MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO PROSHARES.
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