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Traders Are Pulling Money From VIX Funds Like Never Before

  • Even as the securities rise, investors are going for the exit
  • VIX index of market stress jumps 33 percent in January
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Finding Fair Value in a Global Market Selloff

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While stocks are having a chaotic start to the year, investors are withdrawing money from securities that profit from higher volatility at the same time as short sellers are piling into bets that tranquility will return.

Traders yanked $850 million from two of the most popular exchange-traded products tracking moves in the Chicago Board Options Exchange Volatility Index in January. That’s even as the gauge of investor anxiousness known as the VIX is set for its biggest monthly surge since August. In one note, bearish bets briefly climbed to more than 100 percent of shares outstanding.