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NEW YORK (Reuters) – The big uptick in stock market gyrations this year has made a surprise winner out of a trade that has rarely delivered a win – buying and holding volatility. Stock market ructions over the last decade have been few and fleeting, requiring great feats of timing to generate profits from volatility buying. Not so this year. Frequent bursts of market gyrations have kept things lively in the volatility space and has made betting on enduring turmoil hugely profitable. While the S&P 500 .SPX is getting crushed to a degree not seen since the financial crisis a decade ago – the index is down 19 percent in the last three months – a trader who took a flyer on volatility early this year could be pocketing a profit of 70 percent or more swank cufflinks red stone.

“The thing that worked in the volatility space this year is the thing that almost never works – just buy and hold volatility,” said Matt Thompson, co-head of commodity trading adviser Typhon Capital Plc’s volatility group in Chicago. Since volatility usually rises when stocks fall, owning volatility is a form of insurance and just like any other insurance there is a cost attached to it. “Usually it costs a lot to own volatility,” said Jim Carney, chief executive officer at New York-based hedge fund Parplus Partners swank cufflinks red stone.

Most volatility instruments, including options, futures and exchange-traded notes (ETNs), lose value rapidly when stocks are calm or rising. But with the stock market in the grips of almost daily wild swings, for the first time in years it has paid to own volatility, said Carney swank cufflinks red stone. One example of how well that trade has worked is the iPath S&P 500 VIX Short-Term Futures ETN VXX.P, which is up about 72 percent this year. The ETN tracks the performance of the Cboe Volatility Index .VIX, a widely followed options-based barometer of expected near-term volatility for stocks..

VXX follows an index that tracks the price of two near-term VIX futures and seeks to maintain a constant one-month exposure to volatility by repeatedly selling first-month futures to buy second-month contracts. “When the front month VIX future is below the second month there’s a huge cost to owning the product, but now with the front month around the same level of the second month, or above it, there is no cost,” said Carney. Under normal conditions, first-month VIX futures are priced lower than second-month contracts as uncertainty about how stocks will fare leads traders to boost the volatility embedded in further-out expirations swank cufflinks red stone.

That is a problem for VXX, which essentially is constantly selling the relatively cheaper first-month contract and buying the more expensive second-month contract. This constant erosion in value has caused VXX to hemorrhage money like few other products. A $100,000 invested in VXX at its inception in 2009 would be worth about $40 now. But during times of market stress, such as now, first-month contracts become even more pricy than contracts with expirations further out swank cufflinks red stone. That gives VXX a fillip. The VXX is on pace this year to finish up for the first time in its decade-long existence..