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VIX ETFs Are In Crisis Mode
That's what happens Larry when there are 64 million shares short and only 52.3 million shares outstanding...
VXX (Long VIX ETF) is exploding higher amid the short squeeze...
XIV (Inverse VIX ETF) is reflexively puking to new lows...
And that is dragging stocks lower...
UVXY (Ultra Long VIX ETF) as the ultras come under major pressure...
But VIX is "stable"...
As The VIX term structure remains in backwardation and longer-dated vol at highs...
It appears that steamroller is getting very close to the fingertips picking up nickels...
Charts: Bloomberg
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No problem, the HFT's are on the case and they never fuck up.....
Time to revisit this article
http://www.zerohedge.com/news/2015-08-27/lies-you-will-hear-economic-col...
..fun to see shorts of a short fund get squeezed.
Remember TVIX? Good times bros
I think it is a mistake to see the VIX inversion "wrong". Its just telling us a story of changing perceptions of risk.
When that 1k Dow selloff happened the previous Monday, the bulls were caught way off guard and didn't have good risk mitigation in their portfolios (as a group, not talking about individuals) and when this selloff occured they assumed it was going to be just like the "flash crash" a few years ago. That is to say, extreme short term volatility, followed by stabalization before moving on to new highs by the end of the year. The Inversion is showing us that traders/hedgers are starting to change their perception of how long this volatility might last and the size of the volatility.
I agree. The volatility state has bumped up to the next energy level. VXX price is following the SEP/OCT VIX futures (option implied volatility).
TVIX short interest went up 50% TODAY to 21mil out of 25 MIL total.
Its getting even more intereting in the 3x- derivative of a derivatives land....
Gonna be a while to unwind that nonsense.
Unless they're the "bottom" tonight.
We know it's his fucking homework! Where's the fucking money, you little brat?
Whatever happened to Reg T (margin and loan agreements)?
Whatever happened to Reggie Middleton ??
Reg T is only for us little people.....
64 million shares short and only 52.3 million shares outstanding...
That has all the hallmarks of a fair and free market
Old Yeller's put is failing?
So how does one go about borrowing 122% of something? o_0
No logic required when you can print moar.
Well thats not a bad ratio at all. How about GLD?? Isn't it about 100:1 shares to physical? Or is it 150:1 now?
"So how does one go about borrowing 122% of something? o_0 "
The TBTF were manipulating the underlying exchanges/ETFs lower via suppression of the VIX using Options Trades and/or by NAKED SHORT SELLING shares.
NAKED SHORT SELLING is selling shares that you don't have, which becomes quite obvious as in this case when it is apparent that the shares 'short' are in amounts which simply do not exist.
NAKED SHORT SELLING is a form of Counterfeiting.
You are seeing a very large and unbalanced Options Trade and/or a vast Counterfeiting Operation -a RICO Statute Crime- being assailed by Market Participants who are not vested in the proceeds of the Naked Short Selling/Counterfeiting.
Have you ever seen a London Whale catapaulted over the Thames and onto the runway at Heathrow??
Watch This!!
the business of stock borrow is a bit like unregulated bank lending. with cash in a bank, there is a minimum reserve ratio that prevents infinite lending of the same dollar. with stock lending, there is no such reserve ratio, so the same share can be lent over and over.
say i have 100 shares of VXX. unknown to me, my broker BrokerMe has decided to lend the shares to InvestorA, who short sells the shares to InvestorB. BrokerA locates the borrow from BrokerMe and ships the shares over to BrokerB. BrokerB deposits those borrowed shares into it's own custodial account, and decides they too will (unknown to InvestorB) lend the shares to InvestorC who would also like to short sell to InvestorD. BrokerC locates the shares from BrokerB and ships them to BrokerD... etc.
last i actually checked closely, there were no regulatory rules preventing the lending of the same share more than once. if there are new rules as such, then the above would be incorrect and the only way would be to naked short, i.e. short sell without actually locating shares to borrow, which is supposedly illegal but rarely/loosely enforced.
Did you already forget the mortgage collapse when HELOCs we issued at 125% of "appraised" value?
Sept Vix futures are 4 handles overpriced relative to S&P500. Can sell both.
Vxx will got to 60 soon, selling the vix will get wipe out!
As someone who planned and waited for this trade for 4 years, I wanted to just throw my hat in the ring here. Avg $16.98~
I admit 60+ is do-able, but I personally think safer price targets are in the $40-$50. I hate relying on additional panic to hit those higher end price targets. IE, it seems likely the tails will end up in the 60s, but it might be hard to exit efficiently while managing risk.
Max was right about Jamie Dimon. Issue the arrest warrants.
With all the "money" being made on "markets" up one minute down the next we'll all be rich!
how's the ulcer?
how's the hypertension?
Nail gun is good for ulcers and hypertension.
I can't wait for the new DB VIX reverse 10^x exponential variable ETF, where x is 1/mil of shares outstanding.
All in at the checkpoint!
Failures to deliver?
Oh, yes; -eventually.
Margin calls first...
"that steamroller is getting very close to the fingertips picking up nickels..."
I believe the correct Bass quote refers to dimes. That's probably due to the fact that nickels have inherent value, and are thus money, unlike dimes.
TVIX +22% Oh no not that again.
FAZ +8.65%
TVIX up from $5 to $18 in 3 weeks......
He who sells what isn't hissin must cover, pay or go to prison
had a conversation with a guy regarding the structure of the VXX. his position was that since 2008, its been completely dead-meat. that is, until recently. i said to him "what happened starting in 2008 that stopped recently??? QE 1, 2, operation twist, QE 3" ... their entire intent was to force yields lower, encourage people to borrow more, pushing people out the risk curve. combine that and what do u do? surpress vol. once you take that stimulative anchor off, BOOM - volatility explodes like a coiled-spring. for this reason alone, i expect more QE to find its way back in the U.S. markets. IMO this is no longer an emergency measure but will become policy. 7-8 years of ZIRP - the pension funds can't stomach the volatility this will unleash or the inevitable deflation it will lead too; hell here in NJ i laugh at the pensioners who were laughing at me the last 12 months when i blew-out of everything cuz it was CLEAR the party, free-lunch was over. they felt they were ENTITLE to 25-30-35%+ up years. to which i would answer them with "only so-long as the biggest hedge fund with no fear of redemptions is in the game" ... now they are out (more like a temporary pause) and shit is getting borderline outta control. washington doesn't get shit done until stocks are cratering. expect QE4 if we drop another 10-15% and if that doesn't work, they'll just straight-up start buying stocks. again, the pensions are already under-funded. if they start showing "L's" on their P&Ls, heads will explode and that will not be allowed.
"the pensions are already under-funded. if they start showing "L's" on their P&Ls, heads will explode and that will not be allowed. "
IF TPTB gave a fuck about the pensions we wouldn't be in this mess in the first place.
Pensions will be destroyed, heads will explode, TPTB will not give a shit as long as they can end up on top of the smoldering heap.
The .01% are NOT in 'pensions' and thsu do NOT care about pensions.
IF 90% of the pension assets go to ZERO and the rest is devalued by 90%: the .01% will still be the .01%.
In fact, the controlled demolition of the pensions probably serves their interests beautifully.
The .01% are basically on the hook for paying the pensions to their workforces. Getting rid of the liability by any means is likely the underlying objective to this whole engineered crisis...
The .01% are NOT worried about Social Security.
Etc...
I bought it a few years ago. A few reverse splits later it is worth about 10% of initial investment. Kept thinking there would be a big short panic. Well we are having it and it isn't doing much for that position as a whole. 10% up on 10% left is shit. It does me more good as a tax loss at year end then it will ever will as an investment cause I ain't putting more money in it. It is a 2 or 3 day play at most and i would go the casino and have a few drinks instead of playing this abomanation of a trading vehicle.
I agree with this sentiment. The real issue is that between the Fed, the robots, and the dark pools - liquidity is not very deep. So all these institutional investors are completely blinded by their "low vol models", especially because they have a natural tendency to just be long and hold anyway. The Fed killed the value of of research (the idea of value, that something is over or under valued) and the Fed disguised the risks by killing Volatility. The robots killed the liquidity of professional (human) traders and the Dark Pools further reduced liquidity in public markets.
The whole damn thing is a mess and there are plenty of us out there who understand market structure and the concept of risk/reward in trading and portfolio construction, but we're a dieing breed because of these factors. I worked for a big wirehouse for almost 10 years before leaving. Its a combination of having a bad 3 years (because god forbid I actually hedge risk and underperformed a bull market), and the fact that its human nature to think that past performance (typically 1 year performance) is indicative of future performance. There are lots of ignorant managers in high places in these big firms. Buy Buy Buy is all they know. Can't blame them, its been mostly a bull market since the early 80s. They know nothing else.
Times are changing. Another 10 years of sideways trading in the SP500 and a renewed gold bull, and MAYBE, just MAYBE people like us will control more assets. And some sanity will return to the market prices.
Just a couple of years ago I watched the stupid TVXX drop about 60% in a few minutes.
I don't need to get knocked in the head twice. That shit doesn't make any sense.
It's my equivalent of fucking fatties in college. So embarrassing.
Let's see, then there are 116.3 share that people think they own.
VIX ETF shares have been counterfeited to the max.
I'll do my best to keep this simple.
#1 the FED purchased $9trillion dollars of U.S. T-bills foe seven years nicely and sweetly calling it Quantitative Easing 1,2 and 3. This caused U.S. debt to swell to nearly $18 trillion.
#2 This money was leant to 7 primary dealer banks for nearly free. They in turn loaned it to smaller banks for more interest. They in turn leant it to consumers for around 2.9 -4.5%.
#3 All financials benefitting from borrowing from the FED for free bought the market risk free for seven years. The market couldn't go down.
#4 Corporations borrowed nearly free money and bought their own stock for nearly seven years and watched their stock balloon risk free. Borrow, buy, stovk rises, repeat.
#5 QE has ended. Yes Japan, ECB?EU picked up the slack when FED QE ended but after awhile it wasn't enough.
#6 China leveraged themselves to infinity and built cities every where for millions of people and they're all empty. THE PBOC through fake data and their own forms of China QE blew an epic bubble that has deflated.
#7 With no QE and no bullets the FED and it's accomplices on Wall Street manipulated futures and indexes using short squeezes on no volume. There's no volume for months now, many months. Any ETF/Index short squeeze crushed shorts forcing shorts to cover and this would result in no volume melt ups for months.
#8 The party is over. China has collapsed. They have watched their limitless leveraging to crush their stock market. China has to balance their loses and has begun to sell U.S. T-bills. (to be continued)
#9 China selling U.S. debt to get collateral back on their historic losses is huge. Flooding the markets with nearl$100=====billion U.S. T-Bills. They're doing this to Germany's Bunds as well.
#10 Through all of the HFT/ALGOs that banks use their power over the market in unimaginable. With the FED behind them HFTs and ALGOs have pushed ETF positions on nearly no volume to change the markets instantly.
#11 Very little volume post QE made it easy for the " machines " to move the markets at will. Any sign of trouble FED/Wall Street HFT/ALGOs would simply move a positioned weighted to on side and boom! the market turns on a dime.
#12 The party is over. FED interest rate hike is on the table for Sept. (won't happen). QE is over and interest rates going up on borrowed leveraged margins make investors sick. Nobody wants the free, 0% interest rates to end. The markets begin to sell ahead of the rate decision. (to be continued)
Nice summary xxxbean