Cboe Volatility Index (commonly referred to as VIX) is a measure of volatility published by Chicago Board Options Exchange. It is also commonly known as the fear index as it measures how volatile the stock price movements are. when times are good and stable, its values are low. But when the market experiences swings, VIX value increases. A number of derivatives (such as S&P 500 VIX Short-Term Futures) were developed; they are designed to profit on either low or high VIX values. Investors can supplement their stock portfolio with VIX futures and receive reimbursements if the volatility increases. On the other hand, they can also take the opposite position and profit from stability on the market. 1) Demonstrate how VIX futures work. 2) Critically evaluate how risk can be hedged using VIX futures and, on the other hand, what risks such a strategy can bring. 3) Analyse how the VIX index performed since the start of the COVID- 19 pandemic and explain why.