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Exchange-Traded Products Are Making Volatility More Volatile

The growing popularity of these products gives them the power to magnify market moves.

Amid an era of relative market calm, the proliferation of exchange-traded products that give investors exposure to shifts in implied volatility has laid the foundation for outsized swings in the CBOE Volatility Index, commonly known as the VIX.

The VIX, which tracks the implied volatility of the Standard & Poor’s 500-stock index over the next month based on at-the-money options prices, rose for its seventh consecutive session on Tuesday after opening the week with a massive advance to near 21 from 17: