The High-Risk Way to Profit From a Crash

With the S&P 500 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.

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Neither Fool contributor Dan Caplinger, Mike Klesta, nor The Motley Fool has any position in any stocks mentioned. You can follow Dan on Twitter: @DanCaplinger. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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