Investing

Anyone get caught in XIV?

  • Last Updated:
  • Jun 3rd, 2018 11:06 pm
Tags:
[OP]
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham

Anyone get caught in XIV?

Anyone got messed up holding XIV?

I never owned XIV but played the vol through shorting VXX. This saved me cause I had stop loss that kicked in and the ETF didn't go crazy like XIV.
88 replies
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
They won't show up anymore if they posted holding on these likely or they'll have just somehow miraculously got out 'just in time' with a profit of x like the Weed thread during massive draw down periods or like the 'shorting canadian banks' in the multimillions thread.

Either way, they're in forced liquidation for a massive loss if they decided to take the gamble..

Image

Same thing will likely happen to Canadian HVI side -

Toronto – February 6, 2018 – Horizons ETFs Management (Canada) Inc. (the “Manager”) announced today a trading halt on the units of the Horizons S&P 500 VIX Short-Term Futures™ Daily Inverse ETF, which trades on the Toronto Stock Exchange under the ticker symbol (“HVI”).

HVI seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs that endeavour to correspond to the inverse (opposite) of the daily performance of the S&P 500 VIX Short-Term Futures Index™.

The Manager’s decision to halt HVI followed its assessment of the extreme volatility in VIX- futures market that occurred in after-hours market trading yesterday. The unexpected level of volatility has impaired the trading of the underlying derivatives used by many VIX-related exchange traded products that seek to provide inverse exposure to the S&P 500 VIX Short-Term Futures.

The Manager continues to monitor the trading activities in these underlying derivatives and will advise if any further action on HVI is required in due course. In accordance with HVI’s declaration of trust and subject to any necessary regulatory approvals, the Manager has also temporarily suspended redemptions and new subscriptions until further notice.

Toronto – February 6, 2018 – Horizons ETFs Management (Canada) Inc. (the “Manager”) announced today a trading halt on the units of the Horizons S&P 500 VIX Short-Term Futures™ Daily Inverse ETF, which trades on the Toronto Stock Exchange under the ticker symbol (“HVI”).

HVI seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs that endeavour to correspond to the inverse (opposite) of the daily performance of the S&P 500 VIX Short-Term Futures Index™.

The Manager’s decision to halt HVI followed its assessment of the extreme volatility in VIX- futures market that occurred in after-hours market trading yesterday. The unexpected level of volatility has impaired the trading of the underlying derivatives used by many VIX-related exchange traded products that seek to provide inverse exposure to the S&P 500 VIX Short-Term Futures.

The Manager continues to monitor the trading activities in these underlying derivatives and will advise if any further action on HVI is required in due course. In accordance with HVI’s declaration of trust and subject to any necessary regulatory approvals, the Manager has also temporarily suspended redemptions and new subscriptions until further notice.
Jr. Member
Mar 1, 2011
167 posts
84 upvotes
Quick breakdown on this? XIV is traded like a security, and basically overnight it went to 0? The people who bought, would only lose their initial investment?
Last edited by officerjimlahey31 on Feb 6th, 2018 12:28 pm, edited 1 time in total.
Deal Addict
User avatar
Jan 28, 2012
1629 posts
462 upvotes
atang810 wrote: Anyone got messed up holding XIV?

I never owned XIV but played the vol through shorting VXX. This saved me cause I had stop loss that kicked in and the ETF didn't go crazy like XIV.
Go check out the XIV sub reddit. There's a guy there who was trading this stuff for clients and just lost about 4 million USD of other peoples money

Lots of people probably got hammered. I've held HVI off and on for short periods over the last few months but was lucky enough that I got out of my most recent position last week at a small loss
Deal Addict
User avatar
Aug 4, 2014
3418 posts
3624 upvotes
Toronto, ON
I was thinking of buying a bit of HVI yesterday (have played with it in the past), but, luckily, my RRSP transfer didn't arrive - and I didn't feel like a lucky punk to buy it in margin account..
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
officerjimlahey31 wrote: Quick breakdown on this? XIV is traded like a security, and basically overnight it went to 0? The people who bought, would only lose their initial investment?
On Feb 5th this product closed at $99.00 on heavy selling and was down -14.32%. Nothing too extraordinary in this given situation. However, during after hours, professional traders started selling this product viciously. As a result, XIV cratered after hours ANOTHER -84.41% to $15.43.

Why did this happen? Well there was continued selling in the afterhours in market indices so this likely fueled panic selling forcing liquidation crisis. As per the product's prospectus, as of close on Feb 5th - the closing indicative value of this product was only - $4.22. Credit Suisse the issuer of this product halted trading this morning and triggered a "termination event" listed in their prospectus. A termination event is triggered if the daily percentage drop exceeds 80%. I believe the product is still halted but when it does open for trading again it will tank even further closer to the $4.22 indicative value as everyone will try to leave their positions (if they already haven't been margin called) before the product stops trading and is fully liquidated on February 15th.

None of these ETN products should be touched or even thought about if you're not an experienced trader or professional.

http://www.velocitysharesetns.com/xiv
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
Rhaegar wrote: Go check out the XIV sub reddit. There's a guy there who was trading this stuff for clients and just lost about 4 million USD of other peoples money

Lots of people probably got hammered. I've held HVI off and on for short periods over the last few months but was lucky enough that I got out of my most recent position last week at a small loss
Here's the story for those interested, not sure if it's true but serves as a good cautionary tale - https://www.marketwatch.com/story/xiv-t ... 2018-02-06
Sr. Member
Feb 17, 2012
647 posts
127 upvotes
Toronto
First time I played TVIX it went down 27%. I had 27k in there. I decided to hold. Next day it went even farther and I was about to take the loss before I noticed it slight uptrend. I figured I would wait a bit more to limit my loss. Luckily it ended the day +35% but sold after a 33% profit. It ended up being a $500 loss or something. I never went back and will never go back to the Vix or inverses
Deal Expert
User avatar
Apr 21, 2004
54661 posts
19455 upvotes
Jeenyus1 wrote: On Feb 5th this product closed at $99.00 on heavy selling and was down -14.32%. Nothing too extraordinary in this given situation. However, during after hours, professional traders started selling this product viciously. As a result, XIV cratered after hours ANOTHER -84.41% to $15.43.

Why did this happen? Well there was continued selling in the afterhours in market indices so this likely fueled panic selling forcing liquidation crisis. As per the product's prospectus, as of close on Feb 5th - the closing indicative value of this product was only - $4.22. Credit Suisse the issuer of this product halted trading this morning and triggered a "termination event" listed in their prospectus. A termination event is triggered if the daily percentage drop exceeds 80%. I believe the product is still halted but when it does open for trading again it will tank even further closer to the $4.22 indicative value as everyone will try to leave their positions (if they already haven't been margin called) before the product stops trading and is fully liquidated on February 15th.

None of these ETN products should be touched or even thought about if you're not an experienced trader or professional.

http://www.velocitysharesetns.com/xiv
With ETN's, we should also look at the financial stability of sponsor correct?
[OP]
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
alanbrenton wrote: With ETN's, we should also look at the financial stability of sponsor correct?
Nope, the sponsor wouldn't matter. Look at XIV, Credit Suisse backs it and it basically went into thin air. It's also very unfair that the drop happened in after hours. Many people who invested in the product don't even have access to after hours trading.
Deal Expert
User avatar
Apr 21, 2004
54661 posts
19455 upvotes
atang810 wrote: Nope, the sponsor wouldn't matter. Look at XIV, Credit Suisse backs it and it basically went into thin air. It's also very unfair that the drop happened in after hours. Many people who invested in the product don't even have access to after hours trading.
https://www.investopedia.com/articles/b ... d-note.asp

ETNs and Credit Risk
ETNs offer many advantages, notably absence of tracking error, lower taxes and coverage of markets where no other coverage exists or coverage is inadequate. However, for investors who are concerned about safety of principal, these benefits may be outweighed by the fact ETNs are debt obligations and investors can lose all or most of their investment if the provider goes bankrupt.
Deal Fanatic
User avatar
Oct 9, 2008
5681 posts
2235 upvotes
Thornhill
atang810 wrote: Nope, the sponsor wouldn't matter. Look at XIV, Credit Suisse backs it and it basically went into thin air. It's also very unfair that the drop happened in after hours. Many people who invested in the product don't even have access to after hours trading.
That's their risk to bear. There is no fairness in the markets, especially in zero-sum products.

"Credit Suisse said earlier it faced no material impact from the fall in the VelocityShares ETN, in which it has a 32 percent stake. The bank’s exposure to the product, which Credit Suisse launched in 2010 and of which it has around 4.8 million units, was fully hedged, meaning they made other trades to eliminate their own risk, according to a source familiar with the matter."

https://www.reuters.com/article/us-cred ... SKBN1FQ256
Member
User avatar
Nov 3, 2008
286 posts
213 upvotes
National Capital Reg…
Straight in the prospectus:

"The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks. They are designed to achieve their stated investment objectives on a daily basis, but their performance over longer periods of time can differ significantly from their stated daily objectives. The ETNs are riskier than securities that have intermediate or long-term investment objectives, and may not be suitable for investors who plan to hold them for longer than one day. Accordingly, the ETNs should be purchased only by knowledgeable investors who understand the potential consequences of investing in volatility indices and of seeking inverse or leveraged investment results, as applicable. Investors should actively and frequently monitor their investments in the ETNs, even intra-day."
Deal Addict
User avatar
Sep 4, 2005
2929 posts
697 upvotes
Toronto
/r/wallstreetbets is dying over this. Love reading the crazy stuff those guys do. Between Crypto, weed, JNUG, these and other 3x leveraged ETF's.

I lose sleep reading some of their stories, true or not.
Deal Fanatic
Oct 1, 2004
6265 posts
651 upvotes
Toronto
atang810 wrote: Nope, the sponsor wouldn't matter. Look at XIV, Credit Suisse backs it and it basically went into thin air. It's also very unfair that the drop happened in after hours. Many people who invested in the product don't even have access to after hours trading.
can an individual gave access to after hour trading?
[OP]
Sr. Member
Apr 9, 2012
581 posts
167 upvotes
Markham
greg123 wrote: can an individual gave access to after hour trading?
Yea. I use interactive brokers and trade pre market and after market all the time.
Deal Fanatic
Feb 4, 2015
6779 posts
3074 upvotes
Canada, Eh!!
Bought xiv last year in low 90s and sold at mid 90s and patted myself on well done trade... then cursed as watch it go to 146!!

Wow!! Same with tvix... bought some much higher then trading recently... finally sold this week at smaller loss but glad to be not "invested" in these two... not really investing though!!

My bad, no shortcuts and have learnt from it... until next time make some bad investing/trading decision!! Face With Stuck-out Tongue And Tightly-closed Eyes
.......
July 13, 2017 to October 25, 2018: BOC raised rates 5 times and MCAP raised its prime rate next day each time.

2020: BOC dropped rates 3 times and MCAP waited and waited to drop its prime rate to include all 3 drops.
Deal Addict
May 28, 2009
1811 posts
93 upvotes
Toronto
read this thread if you want a broader sample : TradeXIV reddit : Post your Losses

some of the details boggle the mind really .... one of the riskiest instrument and people trading and holding it like it was a common stock.

And not only retail, bet a lot of funds and pensions are caught as well.

Reminds a lot of the 2008 and the MBS market being viewed as "safe and will never fall".

About time to rediscover risk after all these years of central banks trying to kill the concept.

Top