Another day, another all-time low for volatility-linked exchange traded products such as iPath S&P 500 VIX Short Term Futures ETN (VXX) and VelocityShares Daily 2x VIX Short-Term ETN (TVIX).

TVIX was off 3% Wednesday morning while the CBOE Volatility Index, or VIX, fell to its lowest level since June 20, 2007, according to Bespoke Investment Group.

“The recent significant fall in implicit volatilities in recent days, means that long date volatilities (1 year) of most significant equity indices are now testing the frontier level between the post-crisis regime and the ultra low regime of 2004-2007,” according to the Macronomics blog.

The CBOE Volatility Index fell a record 39% last week.

Other volatility ETFs include VelocityShares VIX Short-Term ETN (VIIX), VelocityShares Daily 2x VIX Short-Term ETN (TVIX), ProShares Ultra VIX Short-Term Futures (UVXY) and ProShares VIX Short-Term Futures ETF (VIXY).

The products, which fell sharply in 2012, are designed to track VIX futures contracts rather than the spot price. The VIX is known as Wall Street’s fear gauge and rises when investors are seeking protection in S&P 500 options. Specifically, the VIX reflects volatility expectations for the next month.

“In a major behavioral shift in the wake of the 2008 financial crisis, volatility-based products have become wildly popular in trading circles, despite their complexity and sometime misapplication,” writes Michael Santoli at Yahoo Finance.

More than 95% of the call options on VIX futures traded in 2012 expired as worthless, according to the story.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.