VXX Short Squeezed As VIX Beta Hits -19, Highest Since September 2008

Tyler Durden's picture

Whether it is because bond yields finally broke out of 6 month ranges, due to nerves ahead of tomorrow's ECB tapering announcement, because the SNB is taking a long lunch break, or simply because investors finally realized that stocks have never been more expensive...

... but something odd is taking place today: selling, and nowhere is it more obvious than in the VIX ETN complex, where the VXX is suddenly caught in a vicious short squeeze.

... as the VIX is spiking, up 1.5vols to 12.63 and rising fast.

And while we recently showed that gross Vega outstanding on levered and inverse VIX derivatives including ETNs and ETFs has never been higher...

...as everyone scrambles to buy S&P calls at a rate not seen since 2007...

... here a rather striking update: as of today, the beta of VIX constant maturity futures to the S&P has been increasing during every previous selloff even as the VIX itself has crashed to record lows, and as of this moment, the beta on the vol index has never been higher. Here's Bank of America looking at various VIX constant maturity futures for 1M, 2M and 3M contracts:

we’ve discussed how VIX constant maturity futures have become more reactive to S&P 500 selloffs than they were historically. The relationship continues to be pronounced, though it is most notable in the front part of the curve as the beta of the 1M VIX constant maturity future and the S&P is now -8.33, the most negative we’ve seen dating back to Sep-08. Furthermore, the betas of the 2M and 3M contracts are also at record levels versus the S&P 500 at -5.65 and -4.26 respectively.

And here's the punchline: it’s also worth noting that the beta of the VIX spot index to the S&P is currently -18.99, also a record since Sep-08.

So keep a close eye on that VIX - whose response to a market selloff will be unlike anything seen in 9 years; and if the squeeze has indeed begun, all those famous vol-selling Target ex-managers, are about to lose everything.

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BigWillyStyle887's picture

2018 is going to be fucking epic bitchezzzzzzzzz

Ghost of PartysOver's picture

I tend to agree with that on many fronts.  But for the near future the markets are all about tax reform.   And Paul Ryan is trying to screw main street again.  Forcing DACA into the bill, gutting the only tax shelter for the middle class (401K's).  Trump is going to resists.  Setting up another showdown.

All this plays into Bannon becoming the King Maker in 2018 as Main Street Reps and Dems finally wake up to see how they are getting screwed by both parties.

hedgeless_horseman's picture

 

Chairman Yellen & The Destroyers - Long Gone 

 

One of these days, 

you know it won't be long,

you'll look for me 

and baby I'll be long gone

I'll be down the road

You'll look for me,

but me you won't see

 

Yeah, one of these days, 

you know the time is near,

you'll look for me, 

but baby I won't be here

I'm gonna be long gone

You'll look for me,

but me you won't see

 

Yeah, one of these days, 

you're gonna wake up and find,

this Fed Chairman has changed 

his cotton-picking mind

He's gonna be long gone

You'll look for he,

but his bid you won't see

 

Long gone!

Long gone!

Long gone!

Long gone!

 

https://youtu.be/nAQQ7w9uNcw

CarpetShag's picture

In Australia they say "red sails in the sunset"..

GUS100CORRINA's picture

VXX Short Squeezed As VIX Beta Hits -19, Highest Since September 2008

Observation: Over the last several years, I have watched the "VIX SMASHING PROCESS" with ABSOLUTE AMAZEMENT. I guess when everyone in both companies and on wall street are greedy liars, another process must be found that will elevate stock prices. So we end up with DEBT LEVERAGED BUY BACKS, CENTRAL BANK BUYING and VIX SMASHING.

Well, the VIX SMASHING may have been the lure to tempting to ignore. Everyone saw HUGE DOLLAR SIGNS by SHORTING THE VIX. Just take a look at the chart below of how TVIX has been CRUSHED!!

https://www.finviz.com/quote.ashx?t=tvix&ty=c&ta=1&p=d

Now that everyone is in the VIX SMASHING POOL, be interesting to see if the CBs can keep people from drowning in their own greed.

The VIX rise may become the BLACK SWAN triggering event. There are TRILLIONS of DOLLARS at RISK.

Let's see where the week ends. Remember, Oct 31st is Halloween and all of the DEMONS will be out and about promoting the SPIRIT OF FEAR.  President TRUMP may want to stop taking credit for market advances because markets go up like escalators and come down like elevators.

 

pods's picture

I had a short squeeze last night with Mrs. pods. When the fun is about to end but she hasn't partaken in enough of the fun, try a lil short squeeze to get you to the finish line.

:)

pods

CarpetShag's picture

And how was her yield spread?

pods's picture

I don't tend to kiss and tell, but I know at one point I was upside down?

pods

Scuba Steve's picture

The ol 69 on the chart ...

you old dog, bringing out the tricks that work.

robertsgt40's picture

Tax reform a farce. With a currency based on debt, there is no rearranging deck chairs for a better outcome.  That's why it's a ponzi. You can't survive forever by printing to oblivion. 

gatorengineer's picture

The meme has changed, if you have any money to save into a 401k you are no longer middle class, thats how it will be spun.  From what I am reading if you make less than 60k combined, that for the savings credit is the new definition of middle...

Likely they will save the 401k at the expense of full amnesty for DACA.  Unfortunately watch and see.

PT Barnum used to have the greatest show on earth now, well....

QQQBall's picture

yeah, the $2,400 401K is a canard. Its just a scare to be palatable offset for something else.

 

The real action is: THROW THEM ALL OUT! we can still do that. NO one gets re-elected. THEY ALL FUCKING GO.

BigWillyStyle887's picture

Paul Ryan is begging to get primaried, hes a fucking idiot. 

kliguy38's picture

LOL........they turned off the bots for a couple of hours.......

E.F. Mutton's picture

Gonna Party Like it's 1929

Youri Carma's picture

That was said about 2017 too.

Stock market crash sure but when? Warnings of a stock market crash have been numerous and rightfully so because the exuberance will end some day but for investors this info is worthless if there isn't any timing involved which nobody seems to know. But then we have this:

This Will Be The Biggest Buyer Of Stocks In 2018
http://www.zerohedge.com/news/2017-10-25/goldman-will-be-biggest-buyer-s...

The single biggest buyer of stocks next year will be the same one as before: corporationg buying back stock, some $590 billion of it to be precise, and more than all other sources of stock purchasing in the coming year combined. In fact, without buybacks, instead of net equity demand of $400 billion in 2018, there would be nearly $200 billion of outflows, something not seen since the financial crisis.

So this begs the question if, again, stock buybacks will save the year and bring it safely to the year 2019?

Tolomeo's picture

How do you reckon TVIX will react to a sharp, heavy volume drop of the S&P? Say between 5-10%?

Tolomeo's picture

How do you reckon TVIX will react to a sharp, heavy volume drop of the S&P? Say between 5-10%?

Anarchyteez's picture

Finally! A bit of reality!

gatorengineer's picture

enjoy it while it lasts, we are almost a whole percent off the ATH...  Dumping it now serves no obvious purpose.  To far from the election to blame Trump. 

My best guess is q2 18....  

shizzledizzle's picture

For those that didn't get/understand the warning when the SQUID said "We made a ton of money shorting VOL!". 

EmeraldWI's picture

1929 is just around the corner, or not. 

FreeShitter's picture

Around 29 isn't, until it is.....-Yoda

small axe's picture

this dip? you sure? maybe that next dip...yeah, that's the ticket...great fundamentals and exceptional value everywhere, not to mention the rock-solid domestic political climate in a new nation of serfs and the projected exponential growth of a dying imperial power...dip dip dip

Hunter S. Thompson's picture

Retail investors are about to eat crow. October only has a few days left.

shizzledizzle's picture

Retail investors?! What are those?

LawsofPhysics's picture

GS is harvesting more food, fresh muppet tonight!

 

Snarf's picture

From what I'm seeing we're looking at an imminent attack on North Korea.    Next 48 hours.

 

gatorengineer's picture

Too obvious and far too small of a move....  If we were down 8 percent instead of 0.8 I might agree.

CarpetShag's picture

Welcome to the virtual reality algobot momo-masturbation to spikes and flatlines on banks of 25 inch monitors.

I'll raise your double inverse VIX straddle spreads and shove it up your vol index beta.

About as much connection to any real economic activity as the Cunton foundation has to charitable donations.

Erwin643's picture

Yeah, but who cares?

I'm making money in UVXY today, before I switch gears and go back long at the close.

1stepcloser's picture

If you want to lose money, long term invest in VXX.. The decay is real.  

mily's picture

Which part of VXX prospectus didnt you understand? Have you even read it? 

Dragon HAwk's picture

Be a Hoot if that Swan's name was Vix.  couldn't happen to a nicer bunch of Pricks.

Erwin643's picture

Target managers? LOL!!!!!!!!!

DavidC's picture

"No matter how cynical I get, I can't keep up".

Lily Tomlin

DavidC

Atomizer's picture

Tyler, 

Check your email. Mr Janet Yellen. Black pigeon link. Fire that limp wristed cunt or LGBT woen that won't get marriages. They. We'll fuck AI dolls. Claem to give broth to AI. Stupid cunts. No child support. Elevate equal pay to a Brown Recluse Spider. In America, we call these women black widow women why.. they will kill you on a 2 million dollar insurance scam. 

Mrs Atomizer is very good woman . I can't even imagine dating some cunt today. You see the dating site advertised. Marxist bullshit. 

syzygysus's picture

Green by close bitches.

Atomizer's picture

I'm bit nasty today. Who would ever hook up with theses cunts. They can stay home and finger themselves. Beg for equal pay. Sitting on the couch watching the View 

Fuck that noise. 

flea's picture

It's just a bone ... tossed to the dogs every few weeks.

JMKeynez's picture

Whatever B eye itches.  Shepwave  been nailing markets and VIXxx

cheech_wizard's picture

Then why aren't you retired, living on a beach, drinking pina coladas?

Standard Disclaimer: FOAD!

gm_general's picture

I hope the VIX shorters are wearing their shitting pants!

Hkan's picture

Smell of blood....makes money market mammals maniacs....