With the S&P 500 (INDEX: ^GSPC) having recently hit new record highs, many investors are starting to get nervous that a reversal of fortune for the stock market could be right around the corner. That has driven many profit-hungry investors to look at a potentially lucrative but high-risk strategy to bet on a sharp correction or outright market crash.
In the following video, Fool markets analyst Mike Klesta talks with Fool contributor Dan Caplinger about volatility-linked exchange-traded funds. As Dan discusses, volatility ETFs are designed to soar in value when stocks drop dramatically. But in the absence of a stock market crash, many of these investments have performed badly. Dan reveals one volatility ETF that has performed well and concludes with some guidance for those seeking to add volatility ETFs to their investment portfolio.