XIV termination event?

Discussion in 'ETFs' started by beefcaketrade, Feb 6, 2018.

  1. No, but good question...there'd be a lot more XIV buyers with an account today had they asked this.

    Funds have real assets with intrinsic value. Eventually, as their price drops, it will find a place that a big investor will step in (think Buffett circa 2009) and start buying. As a leveraged ETF, there is a chance of total loss, but it's a very different (much less likely) risk factor, and heavily mitigated by diversity.

    Also, I'm not sure the panic sale of XIV didn't generate a feedback loop that became a self fulfilling prophecy...I.e. The derivatives lead the underlying. We shall see as this one is dissected more.

    The risk on XIV that this could occur was somewhere along the lines of 0.2% on any given trading day (that's a rough calculation a buddy of mine and I worked up yesterday...but should be reasonably accurate). A rare, but ordinary occurrence.
     
    #21     Feb 6, 2018
  2. Probably not, but the bigly lesson here is to always read the prospectus... The devil is always in the details and there is never any free lunch.
     
    #22     Feb 6, 2018
    spread'em likes this.
  3. prc117f

    prc117f

    That sounds risky and it does not seem like its optionable so you cant short it using a limited risk trade.

    Wow that thing is down to under 8 bucks!

    Just found this article Holy shit! This is why I trade my own capital. you never know what risk management/controls are in place.

    UPDATE: XIV trader: 'I've lost $4 million, 3 years of work and other people's money'

    By Shawn Langlois, MarketWatch

    The VelocityShares Daily Inverse VIX Short Term ETN (XIV) was created to give traders an opportunity to bet against a rise in volatility -- the calmer the markets, the more profitable the trade. And it's been one of the best plays out there amid the bull's long and steady assault on new highs.

    All that changed, however, when the stock market began to seriously flame out last week. The ultimate gut-shot landed Monday when the Dow Jones Industrial Average was smacked with a record-setting retreat. The XIV dropped 90% after hours (http://www.marketwatch.com/story/vo...f-wall-streets-most-popular-trades-2018-02-05) following the selloff, leaving a trail of destruction in its wake.

    Nowhere was the pain more palpable than on Reddit's "Trade XIV" group (), which counts more than 1,800 members. One of them goes by the cyber-handle Lilkanna (https://www.reddit.com/user/Lilkanna), and to say he's had a rough stretch would be a huge understatement.

    "I've lost $4 million, 3 years worth of work, and other people's money," he wrote in a post that's garnering lots of attention. "Should I kill myself?"
     
    #24     Feb 6, 2018
  4. prc117f

    prc117f

    hey is it worth buying 100 shares as a wager on XIV. 632 bucks its like buying an option at this point. worst case you lose your 632 dollars. I dont trade ETNs or any of these funky type funds. Whats the Cash payment expected? per ETN share.


    Found this info. I guess the closing price Feb 20 is the cash payment you will get.

    On the acceleration date, investors will receive a cash payment per ETN in an amount equal to the closing indicative value of XIV on the accelerated valuation date. The last day of trading for XIV is expected to be February 20, 2018. As of the date hereof, Credit Suisse will no longer issue new units of XIV ETNs.

    Found out its 4 dollars 22 cents
    wow!
     
    Last edited: Feb 6, 2018
    #25     Feb 6, 2018

  5. Whoa, that would happen? Thanks!
     
    #26     Feb 6, 2018
  6. Overnight

    Overnight

    Why the hell would you buy into something that is going to zero? You ETN guys are crazy.
     
    #27     Feb 6, 2018