Market volatility roared back last week on intensifying tensions in the Middle East. The volatility level represented by the CBOE Volatility Index, also known as the fear gauge, rose 16% on Apr 12, marking the highest level since late October. This suggests that market worries have started to set in. This fear gauge tends to outperform when markets are declining or fear levels about the future are high.

Iran launched a barrage of missiles and drones on Israel over the weekend. This unprecedented attack on Israel has sparked a new tension in the Middle East conflict, heightening fears of a wider conflict in the volatile region. In fact, many countries have expressed their fear of further escalation in the situation as concerns of retaliation remain. The tensions will also lead to a spike in oil prices, which could disrupt the central bank’s battle against inflation, leading the Fed to go slow on rate cuts (read: Inverse ETFs to Play Now on Middle East Tension & Rising Rates?).

Added to the stock volatility is the fading optimism for the Fed rate cuts. The upbeat economic data points to a stronger economy, dialing back the expectations for rate cuts in the first half of this year.

Investors could benefit from this trend. While they can’t directly buy this index, there are several ETF/ETN options available in the market that can provide some exposure to volatility. These products have proven to be short-time winners in turbulent times. Below, we have highlighted short-term volatility products that will steadily move higher as long as market turmoil lingers.

iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX Quick QuoteVXX - Free Report)

iPath Series B S&P 500 VIX Short-Term Futures ETN focuses on the S&P 500 VIX Short-Term Futures Index, which provides access to equity market volatility through CBOE Volatility Index futures and 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 is popular and liquid with AUM of $292.8 million and an average daily volume of 12 million shares. It charges 89 bps in annual fees (read: 3 Safe-Haven ETFs to Add Health to Your Portfolio Now).

ProShares VIX Short-Term Futures ETF (VIXY Quick QuoteVIXY - Free Report)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. ProShares VIX Short-Term Futures ETF has amassed $152.8 million in AUM and charges 85 bps in fees per year. It trades in a volume of 4 million shares per day on average.

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

Investors seeking huge gains in a very short time frame could consider this leveraged volatility ETF. ProShares Ultra VIX Short-Term Futures ETF offers exposure to one and one-half times (1.5X) the daily performance of the S&P 500 VIX Short-Term Futures Index. It has accumulated $259.8 million and charges 95 bps in annual fees. It trades in a volume of 25 million shares per day on average.

2x Long VIX Futures ETF (UVIX)

2x Long VIX Futures ETF seeks twice the performance of the Long VIX Futures Index, charging investors 1.77% in annual fees. It has amassed $73.3 million in its asset base and trades in average daily volume of 16 million shares.

Bottom Line

Investors should note that these products are suitable only for short-term traders. This is because, most of the time, the VIX futures market trades in a condition known as contango, a situation where the near-term futures are cheaper than the long-term futures contracts. As volatility ETFs and ETNs like VXX must roll from month to month in order to avoid delivery, the situation of contango can eat away returns over long periods (see: all the Volatility ETFs here).

However, this seems to be a good time to add these products to your portfolio amid escalating geopolitical tension and an uncertain Fed.