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What Happens When You Run Out Of VIX To Short?
You just short some more...
Since December 2013, there have been more shares short than shares outstanding in VXX - the VIX ETF.
Currently, there are 2.5 times more shares short than shares outstanding... as oustanding collapses to six-month lows as shorts surge to a new record high...
and the Inverse VIX ETF - XIV - is at extremes also...
Basically this is how the Fed (explicitly or via its agents) can sell VIX in perpetuity. With almost 3x more short interest than shares outstanding (and yes we understand there is all that ETN creation malarkey), this is a blunt hammer approach...and as naked as it gets
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As JPMorgan additionally notes,
What is also evident from Figure 4 is that the recent rise of the ratio of the open interest of VIX put options over the open interest of VIX call options has risen by a lot less in the recent correction vs. that of August 2011. At the time that ratio had tripled to 1.2x vs. 0.5x currently. One anecdotal explanation for this discrepancy is that the vol of vol (VVIX) has spiked by so much in the most recent correction, that it reduced on the margin the incentive by institutional investors to buy VIX puts.
However the vol of vol had spiked to a similar level in August 2011 i.e. at 130%. A simpler explanation is that the VIX spiked at a higher level at the time, at 48 vs. 27 in the recent correction, inducing more participants to play a retracement in vol at the time. Also in August 2011, the VIX had stayed at very elevated levels for much longer, effectively until November that year.
But different to institutional investors trading VIX options, retail investors sold VIX ETFs and flocked into inverse VIX ETFs in recent weeks in similar amounts than those seen in August 2011. This is shown in Figure 5 where the 4-week flow into VIX ETFs minus the flow into Inverse VIX ETFs declined to -$1.8bn matching the low seen previously in August 2011.
Admittedly, this VIX ETF net flow slowed this week to -$42m vs. an average of -$580m in the previous three weeks. This reversal is mostly due to retail investors stopping buying inverse VIX ETFs this week following heavy buying in previous three weeks. In fact retail investors took some profit by selling a small amount of inverse VIX ETFs this week.
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VIX futures net spec position has not been long since Nov 2011
h/t Andy Y
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What happens when you run out of linen upon which to print cash? You just do it digitally. Vio-l-f-in'-a
No govt sponsored blind eye here
You call up EPSON, grab a few new printer toners, and naked short the PM ETFs...
Stack phyz.
Fractionalize some more?
Its all fiat anyways.
RIPS
Everything is counterfeit.
.
. . . in its own way . . .
Uranium Hexafluoride (UF6) leak at Honeywell Plant in Metropolis Illinois (upwind from Paducah KY) | Dutchsinse
A Honeywell spokesperson says there is not an active release at the plant anymore. Emergency personnel are still working to determine a specific source of the release.
"One anecdotal explanation for this discrepancy is that the vol of vol (VVIX) has spiked by so much in the most recent correction, that it reduced on the margin the incentive by institutional investors to buy VIX puts."
Or it could be that the vol of vol of vol (VVVIX) dropped by enough it increased the margin incentive in the triple-double-inverse whammy VIX (VVVVVVVVVVVVIX) that it rocketed the entire market into a dimension that can not exist in real 3rd dimensional space and time.
Damn, I'm bored. Would something interesting please happen?
Someone should provide your name to the Nobel nominating committee.
+ <infinity>
Manipulating the second derivative. Just a note: leverage is a two way street.
...unless you own a money printer.
Silly me. Of course there are no consequences to printing money in excess, especially now that the barbarous relic has been relegated to oblivion for eternity.
You naked short, duh.
What this means is that people who are short vol are about to get blown up. Last week in the VIX options pits, hundreds of thousands of November calls were purchased. My guess, someone sees the end of QE and markets that at are at technical resistance points, setting up for a pretty big spike in vol. I would agree.
"markets"... Funny
Or maybe since its been net short since Nov 2011 because thats when SVXY went live. People go short the VIX because of the negative roll yield in VIX futures.
An ETF for the supposed indicator of "volatility" in FED propped cotton candy equities.
If that doesn't tell us all we need to know about this Ponzi I don't know what would.
Short squeeze coming? (Not)
only one false flag/black swan away...so tempting for tptb
Synthetic naked shorts...a man with no clothes on wearing fake invisible jockeys.... Its really not that complicated, Bitchez
Wow. If this truly caused a massive short squeeze I will just about qit my day job.
When the VIX finally does go over 25 and stays there, then "I felt a great disturbance in the Force, as if millions of voices suddenly cried out in terror, and were suddenly silenced. I fear something terrible has happened."
Hrm, the ticker QEVX doesn't exist yet... :-)
The force be with you Bryan.
No matter...Dah CRIMINALS, have shot their last shot!
come to papa...I be waitin
this is the same thing when you run out of gold to short - you just short some more!
Oh, and props to MY MAIN MAN!!...
keeps a brother informed like no other
I'm not real smart as to what I just read in this story.
But, How can you "Short" something that does not exist?
All your rules are not for the rigged market that are mine.
The same way you short PM contracts to ridiculous levels and get away with it. Should not be able to in a real market but somehow this is happening and it is not likely an accident.
Thanks !
Ditto post?