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Dude, something is going on. XIV just went through a "termination event."
This is what it says in XIV's prospectus regarding a termination event:
"The termination risk for XIV appears to be limited to market crashes worse than the Flash crash. Two examples that come to mind are the 2009 crash and the October 1987 crash."
I don't know what's going to happen, but does that sound good to you?
A lot of board rooms are calling emergency meetings right now:
As discussed in more detail under “Specific Terms of the ETNs—Acceleration at Our Option or Upon an Acceleration Event” in this pricing supplement, an Acceleration Event includes any event that adversely affects our ability to hedge or our rights in connection with the ETNs, including, but not limited to, if the Intraday Indicative Value is equal to or less than 20% of the prior day’s Closing Indicative Value.
But I would agree, it's not good, and the firms traders saved CS's bacon by buying VIX & VXX as fast as possible yesterday.
My question is, who was responsible for the rise in VIX? Anybody can gain access to US markets, right? Who do you think is doing this? Who is the VIX elephant?
Who would have incentive to crash the US market? We honestly don't know what's going on. Our greatest strength might be our greatest weakness.
My question is, who was responsible for the rise in VIX? Anybody can gain access to US markets, right? Who do you think is doing this? Who is the VIX elephant?
Who would have incentive to crash the US market? We honestly don't know what's going on. Our greatest strength might be our greatest weakness.
There is not a VIX elephant, so to speak. The VIX is basically the change of the cost of buying puts over the next 30 days implied.
VIX doesn't crash the market it represents a graphical indicator of market cost. Products like XIV, SXVY, UVXY, etc. are derivatives of the VIX which is itself a derivative.
The key here is as it always has been. If you diversify and use risk protection (portfolio hedging, downside protection with puts) you've already factored in most of the costs. When markets drop like they did, you don't worry, b/c yes the underlying in your portfolio have taken a hit, but the cash from your exercised puts offsets and makes you whole. They are the "insurance" you hope you never have to use, but when you do it's amazing.
For XIV the termination event is triggered if the daily percentage drop exceeds 80%. It is also being terminated on Feb 20th.
It's not a termination event. It's an acceleration event. You CAN NOT terminate a debt product. You can call it, or end early it's due date, and as the language shows, basically let it be worth zero, and walk away (screwing investors). But you can not terminate a fund/bond/issue.
But yes they are calling the notes due, and essentially walking away on the 20th. I hope the NY FED Bank gives a fair price calculation.
Easy to be superior about it when the slide stopped in two market days. If we were down 15% in three, you wouldn't have posted this.
Amen to that!
Several of my ETF positions got stop loss'd out on day 2. Nothing emotional about it, the % threshold was set to allow for a healthy drop but stop while there was still some profit, and that's what happened. No reason not to use the tools that are available with ETFs and individual stocks, as long as you learn how to use them effectively.
What's upsetting me more than anything is that the conservative stuff I have isn't performing well either. I've got PPL stock for about the past 3 months - it's gone nowhere but straight down since I bought it. And I've still got some municipal bond funds -- same thing. The things that should be safe --- aren't.
Your are purely speculating by purchasing these leveraged notes tied to a volatility index- if they get wiped out by the underlying bank then tough sheet-
It's all these types of vehicles & the likes of crypto currencies etc. that have no underlying assets that make me nervous that we have entered into a more euphoric stage as "investors" are willing to risk capital on.
The market is and has been expensive but the recent corporate tax decrease makes me believe that the P/E for the market has lowered as earnings should be increased. I realize the recent run up this year is most likely priced the tax break in but investor sentiment has become excessive. Typical last stage of bull markets is euphoria.
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