Tuesday, February 6, 2018

Ha ha

This is only Zerohedge-level news, but apparently XIV's drop extended to beyond 80% after the bell, which means the short volatility ETF is going to liquidate.

I knew this sort of thing could happen, because I bothered to read their prospectus.

But if people were in XIV just to make 5x the return on SPY, and if people had piled into XIV in the past month as the stock market assploded upwards, then there will be true carnage today if XIV really is being liquidated. Lotta people going to $0.

That'll mess up the $VIX futures market for a bit.

Which also would suck because, had XIV survived, it'd be a fantastic buying opportunity right now.

By the way, $VIX intraday premarket right now is around 50.

UPDATE: I just checked my trading account, and apparently HVI.to, the Canadian version of XIV, still exists. Which is funny cos that means the US XIV collapse is just because of a panic selling run. As of 9:33 though, I can see no trades having gone through, and Bid=Ask, so it looks funny.

No, I wouldn't buy HVI.to right now, cos I have no idea (haven't checked) if it's tethered in any way to XIV.

UPDATE 2: XIV is officially terminated. So long to a great beta machine! You were warned in the prospectus, people.

UPDATE 3: HVI.to is not terminated yet, just halted (as of 9:52 AM). They're going to have to figger out whether they're still alive, I guess. This proves the XIV collapse was just bots selling into nonexistent bids. Which, again, we all knew could happen in all sorts of things.

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