Already fragile geopolitical conditions in the Middle East deteriorated further on Saturday after the United States and Israel launched strikes on Iran, triggering a sharp rise in global market volatility. The CBOE Volatility Index, which reflects market expectations of near-term volatility conveyed by S&P 500 Index option prices, has risen since the strike, extending this year’s volatility surge and signaling growing market anxiety.
Iran responded with broad retaliatory attacks targeting U.S.-aligned assets across the Persian Gulf. According to BBC, missile interceptions were reported by Qatar, Bahrain, Jordan and Kuwait, while Oman, the United Arab Emirates and Saudi Arabia also reported being hit.
According to Reuters, the weekend’s military offensive resulted in the death of Iran’s Supreme Leader Ayatollah Ali Khamenei, deepening regional instability. Per media reports, as quoted on the abovementioned Reuters article, President Trump indicated that the conflict could drag on for another month, keeping the prospect of sustained military action in focus.
The opening months of 2026 have been characterized by persistent volatility. January was dominated by geopolitical tensions, while February saw markets increasingly unsettled by AI-related risks and disruptions. Early March has offered little relief as geopolitical uncertainty continues to cloud the outlook.
The Case for Volatility ETFs
Increasing exposure to volatility ETFs as a short-term allocation may help hedge downside risks, proving to be a winning move for investors. Taking precautions upfront is better than facing avoidable risks later. These funds deliver short-term gains during periods of market chaos and may climb further if volatility continues.
Investors with a long-term horizon may be able to look past these near-term uncertainties. However, in the current economic environment, volatility-focused funds and strategies are ideal for investors with a short-term horizon.
With the potential for increased volatility, adding these ETFs may be a smart strategic move (See: all Volatility ETFs here).
ETFs to Explore
Below, we have highlighted a few funds that investors can consider to gain increased exposure to volatility ETFs.
iPath Series B S&P 500 VIX Short-Term Futures ETN VXX
iPath Series B S&P 500 VIX Short-Term Futures ETN seeks to track the performance of the S&P 500 VIX Short-Term Futures Index Total Return. The index offers exposure to a daily rolling long position in the first and second-month VIX futures contracts. iPath Series B S&P 500 VIX Short-Term Futures ETN charges an annual fee of 0.89%.
ProShares VIX Short-Term Futures ETF VIXY
ProShares VIX Short-Term Futures ETF seeks to track the performance of the S&P 500 VIX Short-Term Futures Index, which measures the movements of a combination of VIX futures and is designed to track changes in the expectation for one month in the future. ProShares VIX Short-Term Futures ETF is ideal for investors looking to gain from an increase in expected volatility of the S&P 500. The fund charges an annual fee of 0.85%.
ProShares VIX Mid-Term Futures ETF VIXM
ProShares VIX Mid-Term Futures ETF seeks to track the performance of the S&P 500 VIX Mid-Term Futures Index, which measures the movements of a combination of VIX futures and is designed to track changes in the expectation for VIX five months in the future. ProShares VIX Mid-Term Futures ETF is ideal for investors looking to gain from an increase in expected volatility of the S&P 500. The fund charges an annual fee of 0.85%.
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iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports ProShares VIX Short-Term Futures ETF (VIXY): ETF Research Reports ProShares VIX Mid-Term Futures ETF (VIXM): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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