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The TVIX Debacle

Tyler Durden's picture


With the double-levered long Vol ETF TVIX down 30% in the face of a falling equity market and rising VIX, reality appears to have been suspended. The crushing divide seems driven by the fact that Credit Suisse halted share creation forcing the ETF to behave more like a closed-end fund and with its massive premium to NAV (thanks to extreme hard-to-borrow-ness), this compression makes some 'technical' sense. While the Vol ETFs are designed to track VIX futures not spot, we remain skeptical of these instruments (or the options on them in their wonderfully compound manner) and although CS has said this cessation of share creation is temporary, it definitely brings up significant operational risks for anyone considering trading these vol plays.

The TVIX premium to NAV was huge at over 80% as it became hard-to-borrow and with today's action that premium is cut in half (and we assume NAV will rise given the pop in risk).

UPDATE: What is probably most likely the driver of the collapse, however, is the reversion to reality (akin to the NAV premium) as pointed out by Nic Colas (h/t) of TVIX (the actual equity position) to TVIXIV (the underlyting vol index itself)...


Charts: Bloomberg


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Thu, 03/22/2012 - 15:33 | 2281475 Clueless Economist
Clueless Economist's picture

MUST hold 13,000...dear GOD PLEASE

Thu, 03/22/2012 - 15:43 | 2281517 LongSoupLine
LongSoupLine's picture

"We're well off the lows!" - Maria "nails on a chalkboard" Bartormo

Thu, 03/22/2012 - 15:57 | 2281571 idea_hamster
idea_hamster's picture

If you're wondering whether TVIX will go to zero, consider this:

[B]ecause of the way in which the underlying Indices are calculated, the amount payable at maturity or upon redemption or acceleration is likely to be less than the initial principal amount of the ETNs, and you are likely to lose part or all of your initial investment.  In almost any potential scenario the Closing Indicative Value (as defined below) of your ETNs is likely to be close to zero after 20 years and we do not intend or expect any investor to hold the ETNs from inception to maturity.

 That's from page 1 of the TVIX prospectus.

Thu, 03/22/2012 - 16:16 | 2281669 Comay Mierda
Comay Mierda's picture

not only that but contango is killing the vix etfs.  personally i see vxx hitting $15-$16 range before any possibility of a turnaround.  it is stuck in a steep downward channel over the last week or so that broke out of a downard triangle starting back on the 1/13  the market will prob go haywire starting mid april, but there is still some serious hopium in the system

Thu, 03/22/2012 - 16:42 | 2281772 sablya
sablya's picture

The same holds for any leveraged ETF.  All else being equal, a 3x will go to zero faster than a 2x.  Decay, reverse split.  If you didn't have to pay to borrow shares, you could just sell short TNA and TZA and ride the decay forever without any risk.

Thu, 03/22/2012 - 17:41 | 2281918 Panafrican Funk...
Panafrican Funktron Robot's picture

What's particularly asinine is that most retail can buy VIX options directly through their regular trading accounts.  There is the obvious weirdness/manipulation of the VRO at expiry (and I wouldn't suggest holding until expiration), but even there, the VWA/VWB opening indicators on expiration day provide a pretty reliable range of where the VRO will fall.  

Main point:  If you want a VIX play, just trade the VIX options instead of getting caught up in this crap.

Fri, 03/23/2012 - 02:23 | 2282714 Cadavre
Cadavre's picture

If you're wondering whether TVIX will go to zero

 - the art of finessing reverse splits to zero ...

From article, "Vol ETFs are designed to track VIX futures".

The difference between designed and delivered is the fund managers taste.


Fri, 03/23/2012 - 08:25 | 2282920 tradesavant
tradesavant's picture

If you read page 28 of the prospectus it clearly states that TVIX will go to zero and you will lose substantial portions of your investment. I quote directly from the prospectus:


The long term expected value of your ETNs is zero. If you hold your ETNs as a long term investment, it is likely that you will lose all or a substantial portion of your investment. 


Here's one of our daily Junto sessions, on Wednesday evening, where Greg Simmons and I lament overthe fraud that these ETF/ETNs are.

Thu, 03/22/2012 - 16:39 | 2281766 max2205
max2205's picture

fyi, from congressdouche


Samllcap investors should beware the just-passed JOBS Act, whose new rules on crowdfunding may make ripoffs easier. The legislation would let firms generating less than $1B in revenue raise more money from multiple investors without SEC registration, exempt accountants from attesting to internal controls of the firm it audits, or disclosing conflicts of interest with brokers who provide research.

Fri, 03/23/2012 - 02:51 | 2282724 Cadavre
Cadavre's picture

Sign me up and bail me out, Scotty - shopping that next great CDS play.

Coinciding with a call from Dallas FED chairman for the immediate breakup of the break up of large banks ... learned this somewhere: Ten 10 Megaton bombs have a lot more kill radius than One 100 Megaton bomb. Great, so now there will be the parking at a GS branch next to the Baskin Robins tp contend with .. great ... go forth and rehypothocate said LLoyd to Izzy Pop!

Thu, 03/22/2012 - 17:34 | 2281907 JPM Hater001
JPM Hater001's picture

I hope we dont start crossing back and forth over again but I called this three weeks ago.  Fed can buy is into a new mile high hole but there is a real mental barrier for everyone but the Algos.

Mile high hole... I miss you Julie...climbing the


Thu, 03/22/2012 - 15:33 | 2281481 HedgeAccordingly
HedgeAccordingly's picture

makes perfect sense.. fleece the average investor. wallstreet wins -

Thu, 03/22/2012 - 15:41 | 2281507 speconomist
speconomist's picture

Another link on the topic if you want to understand it better:

Four Key Drivers of the Price of Tvix:

Thu, 03/22/2012 - 15:48 | 2281540 HelluvaEngineer
HelluvaEngineer's picture

FWIW, this apparently somehow just whacked the VXX as well

Thu, 03/22/2012 - 15:50 | 2281552 No Bid
No Bid's picture

it's entirely possible that it collapses all the way to NAV if they start to issue new shares.  hard to borrow means you can't short it to the NAV and make the spread.  this price action looks like someone knows about upcoming shares.  or initial speculation leads to a run.  


either way, should never be hard to borrow, create the shares or lock up new share issuance and take a page from the fed's playbook... "we will not issue shares until late 2012." 

Thu, 03/22/2012 - 15:33 | 2281478 Marge N. Callz
Marge N. Callz's picture

That is why ETF's are a bigger ponzie than the stock market.

Thu, 03/22/2012 - 15:52 | 2281555 Sam Clemons
Sam Clemons's picture

Amazingly, inverse ETFs are even bigger junk than regular ETFs.  As if that would be possible.

Thu, 03/22/2012 - 16:16 | 2281676 Apocalicious
Apocalicious's picture

All inverse ETFs will go to zero eventually. All of them. It's a when not if proposition.

Thu, 03/22/2012 - 18:53 | 2282035 Sam Clemons
Sam Clemons's picture

Not when they can reverse split ad infinitum a la Citi and AIG

Thu, 03/22/2012 - 15:35 | 2281489 The Axe
The Axe's picture

super ponzie....ponzie cubed....

Thu, 03/22/2012 - 15:35 | 2281490 BackOffice Slut
BackOffice Slut's picture

Hard to borrow? More like NOT BORROWABLE AT ALL!  Either that or i got fleeced again  :-(

Thu, 03/22/2012 - 15:36 | 2281491 Wixard
Wixard's picture

Tvix was up the other day even though the vix was down. Huge red flag right there.

Thu, 03/22/2012 - 16:03 | 2281600 resurger
resurger's picture

VXX was down and the S&P was down, nothing wrong there ...

i took the losses, and i knew that it was bullshit!

those instruments must have been way way higher if those markets are heading higher, as more people want to hedge against the downturn


Thu, 03/22/2012 - 16:12 | 2281654 MarcusLCrassus
MarcusLCrassus's picture

With this kind of volatility, TVIX might be a good candidate for a straddle. 

Thu, 03/22/2012 - 16:23 | 2281706 TradingJoe
TradingJoe's picture

its already underway, hedgies are shorting TVIX and buying VIX futures!!! Thing is, one little "news" and the door won't be wide enough for all to squeeze through it! :))

Thu, 03/22/2012 - 17:33 | 2281904 fonzannoon
fonzannoon's picture

spoken like a true crackhead...when will people wake up? You should read the long walk by Stephen King. It's the same premise. You think you will make a fortune and end up with a shotgun pointed at your head.

Thu, 03/22/2012 - 15:36 | 2281494 fonzannoon
fonzannoon's picture

I closed my account today due to this. Enough is enough.

Thu, 03/22/2012 - 15:55 | 2281559 HarryM
HarryM's picture

Went to lunch , came back and was down $9000+

Real estate can't be much worse than this

This is fucking criminal

Thu, 03/22/2012 - 15:59 | 2281583 Hippocratic Oaf
Hippocratic Oaf's picture

same, closed it......done!

Thu, 03/22/2012 - 17:26 | 2281880 slewie the pi-rat
slewie the pi-rat's picture

good for you guys!

i hope you get your funds without suing in a routine manner;  bleed the damned beastie, boyz!

and thxz to tyler and nic for getting this up and nailing it!

Thu, 03/22/2012 - 17:44 | 2281927 JPM Hater001
JPM Hater001's picture

"Closed my account today due to this"

You're just playing the wrong side.  This is not a normal market.  Ladder out (Buy expiration in each month over 12 months and as one goes out put in the next.

This is not going to be a normal 1000 point drop.  You only have to be right may also be the last time...

Thu, 03/22/2012 - 17:51 | 2281938 fonzannoon
fonzannoon's picture

I think someone made the point that if you happen to be holding this or anything similar and nail the timing perfectly and have a 2 million dollar gain when you sell your screen will flash "haha just kidding go fk yourself!!"

They won't let you win. Especially if it is the big one. I am in Sheep dog's camp from here on out. Poof...and it's gone.

Thu, 03/22/2012 - 18:16 | 2281978 J 457
J 457's picture

I've tried that since Nov and continue to lose every month since.  Maybe eventually I'm right, but at this rate will go broke before getting even.

Thu, 03/22/2012 - 15:38 | 2281496 CalibratedConfidence
CalibratedConfidence's picture

the casino continues its record fleecing rate

Thu, 03/22/2012 - 15:38 | 2281497 Irish66
Irish66's picture

Thank you

Thu, 03/22/2012 - 15:41 | 2281506 junkyardjack
junkyardjack's picture

Heads the casino wins, tails you lose

Thu, 03/22/2012 - 15:41 | 2281508 JustObserving
JustObserving's picture

TVIX premium to NAV was 80% and it's not even the new iPad?  Does it deserve a 40% premium now?  Markets are disconnected from reality and rationality.

Thu, 03/22/2012 - 15:47 | 2281532 lizzy36
lizzy36's picture

Well when NO new shares are being printed, who the hell knows what premium it deserves.

It should be halted, and delisted.

Thu, 03/22/2012 - 15:41 | 2281510 TradingJoe
TradingJoe's picture

Hedgies had a field day today! 

Thu, 03/22/2012 - 15:42 | 2281515 CvlDobd
CvlDobd's picture

Anyone with half a brain should have seen this coming over the past few weeks. Tyler keeps showing examples of the levered ETFs being a mostly unwinnable game and yet many here keep going back to the fire. Was the premium and suspension of creation units not a sign that something was up?

Idiots who dick around with these deserve to give all their money to the crime syndicate.

Thu, 03/22/2012 - 16:36 | 2281761 amadeusb4
amadeusb4's picture

Right, because buy and hold stocks has been such a wonderful investment strategy since 2000. So if your front motorcycle tire blows due to a manufacturing defect, then you're an idiot for dicking around with motorcycles? Liability declaration in a prospectus does not obsolve the institution from everything.

Thu, 03/22/2012 - 17:25 | 2281878 tmosley
tmosley's picture

Hmmm, so you think your only two choices are levered ETFs and stocks?

It's more like you buy a tire from a bankrupt, zombie company that is well known for having 100% of its tires fail catastrophically.  Sure, the company may be at fault, but you are the one that didn't protect your interests, even though you KNEW that this was and remains a corrupt game.

I left the paper game after QE1 started.  I can't fathom the thought process of anyone who decided to stay after QE2 was announced.

Thu, 03/22/2012 - 18:16 | 2281980 NotApplicable
NotApplicable's picture

Well... they gotta put that money... wait for it...


Thu, 03/22/2012 - 19:22 | 2282084 CvlDobd
CvlDobd's picture

@ amad your logic is flawed as pointed out in tmosley's post.

Your motorcycle tire argument would be valid, if I cut the cords from the inside of the tire with a dremel tool prior to mounting then got pissed off when the tire blows out in the middle of a fast sweeper and sends me into the guardrail.

As it stands, I check my pressure before every ride and visually inspect the carcass (prospectus) before every ride for nails. When I do buy tires I only use Michelin Pilot Power 2CTs and Power Pures on the R1 because they are a reputable company that makes a solid tire. I am also very comfortable and familiar with the handling characteristics of their tire. So try again.

@ NA, if they have to put it somewhere they could also give it to a bum, shred in their garbage disposal, or my choice, give it to a local stripper after a lapdance. Equally as useful.

This market is clearly designed by TPTB to wipe out all bears so that when the collapse comes they wont havee any money left to profit on it. Levered volatility ETFs just hasten the process for them so why do so many zero hedgers continue to gladly give them their money?



Thu, 03/22/2012 - 21:34 | 2282350 Panafrican Funk...
Panafrican Funktron Robot's picture

"why do so many zero hedgers continue to gladly give them their money?"  

Pretty fucking excellent question imo.

Thu, 03/22/2012 - 23:30 | 2282550 CvlDobd
CvlDobd's picture

Your downvote came from one of today's bagholders... uh I mean sophiticated investor!

Thu, 03/22/2012 - 15:45 | 2281523 lizzy36
lizzy36's picture

This is another "awesome for confidence" product. Who the fuck creates these monsters?

Moreover, these 2x/3x inverse products are an absolute horror for anything but an intraday punt. The should be banned as a retail product.

Want to create a cheap hedge against mrkt volitality why not buy a SPX or SPY put (especially with implied vol so low).

TVIX doesn't even track the VIX it tracks the VXX.

Thu, 03/22/2012 - 15:47 | 2281527 devo
devo's picture

I believe the prospectus for this instruments says your investment will go to zero if held long enough. There isn't a good Vix tracker, unfortunately. Selling Vix options is probably the best strategy, since in purchasing them you're buying implied volatility on volatility, and who can accurately guage that?

Thu, 03/22/2012 - 21:36 | 2282352 Panafrican Funk...
Panafrican Funktron Robot's picture

"Selling Vix options"

Agreed, particularly because it's Euro style and the can't flash crash/smash you out of the position.

Thu, 03/22/2012 - 15:48 | 2281535 RmcAZ
RmcAZ's picture

This is fucking bullshit... this is like betting on double zero with roulette, and then the casino removes double zero off the wheel after you place your bet. Fuck ETFs.

Thu, 03/22/2012 - 15:50 | 2281546 resurger
resurger's picture


Thu, 03/22/2012 - 18:37 | 2281998 noob
noob's picture


"..., tomorrow is another day."

Thu, 03/22/2012 - 15:49 | 2281547 Frank N. Beans
Frank N. Beans's picture

uvxy has been acting weird also the last few days; today it seems more "rational" though.

Thu, 03/22/2012 - 15:57 | 2281573 resurger
resurger's picture

with that stocksplit, so they rape the average investor even more .....


Thu, 03/22/2012 - 17:29 | 2281888 HyperLazy
HyperLazy's picture

That recent UVXY reverse split was quite the nut crusher, which I did warn about. This past week TVIX was trading waaaay above NAV, it had to correct at some point. I was a bit surprised that it did so today with as much violence as it did. A literal abandon ship. UVXY was trading below its NAV and thus its errant behavior. What is curious to me is why XIV was trading above NAV earlier this week. I can only suspect folks were fleeing TVIX and piling into XIV. In addition, according to my market display the TVIX.NV is at 7.61.

Disclosure: I admit that I have flipped TVIX and UVXY a half dozen times since February. I haven't held any VIX related products for almost two weeks. My HyperLazy sense was going off.


Thu, 03/22/2012 - 16:01 | 2281584 walküre
walküre's picture

At least we have CONFIRMATION that when the shit really hits the fan next time, there are absolutely NO HEDGES in the casino market.

2008 was orchestrated, on cue and only to benefit a few insiders who had made the right bets. I'm not saying it cannot or will not repeat itself but I guarantee with almost 100% certainty that those who flaunt the label "sophisticated investor" because they're trying to hedge their bets for the day WHEN, will get fleeced.

When NOT if the paper market collapses, it will take down all prices for all paper stocks including those that were supposedly designed as hedges or inverse ETFs.

Be warned. Take the money out while you can and buy tangible assets. That's all there is to it.

Thu, 03/22/2012 - 16:04 | 2281602 devo
devo's picture


I'd just add tangible assets you can actually hold. Whether it be gold, beans, or a Canon 50mm prime lens.

Thu, 03/22/2012 - 16:12 | 2281653 walküre
walküre's picture

agreable land is a good commodity

who junked you?

Thu, 03/22/2012 - 16:26 | 2281679 devo
devo's picture

I agree, in theory, but I think people should hold assets they can hide. It's hard to hide land, and the government will take it (or tax the hell out of it). Can't put any faith in this government upholding property rights. We're all screwed.

Fri, 03/23/2012 - 00:31 | 2282632 GoinFawr
GoinFawr's picture

Portable property was Mr. Wemmick's favourite; had a mini cannon at the front door too... in London. Fictional, sure, but I read once somewhere that life imitates art, or something like that.


Thu, 03/22/2012 - 16:08 | 2281607 HarryM
HarryM's picture

Can Credit Suisse be sued over this?

Thu, 03/22/2012 - 16:08 | 2281634 HelluvaEngineer
HelluvaEngineer's picture

Most likely, yes.  But banks are above the law and judges are bought and paid for.

Thu, 03/22/2012 - 16:43 | 2281777 amadeusb4
amadeusb4's picture

It depends on what happened exactly. If this was a short selling hatchet job, then it's hard to fault CS for it. On the other hand, halted issues essentialy created a crime of opportunity for said hatchet men. This would fall under the bar proprietor getting patrons drunk and then releasing them on the neighborhood area of the law. While not directly responsible for what happened, the drunks technically are, the bar is responsible for creating an environment ripe for populating by drunks. Given the status finance has in our society and the fact that this involves a foreign bank, only a cadre of really rich people ripped off by today's price action could put together a class worth representing and/or you'd have to find multiple AG's willing to pursue this.

Thu, 03/22/2012 - 16:06 | 2281621 devo
devo's picture

Bullish for gold, though. Just more fraud revealed. I feel bad for my brother, who just put 10k into this last week speculating Vix had to go up. Well, it did, but this instrument clearly didn't. I tried to warn him to read the prospectus. I think a large problem is people see "inverse vix etf" and think it tracks it, but you have to read the prospectus and understand how the thing works. If anyone read it, they'd stay far away from this thing.

Thu, 03/22/2012 - 16:13 | 2281661 HarryM
HarryM's picture

I actually hold short positions in TNA and SDOW at the same time to play the deterioration angle.

This was freaking free fall - not based on tracking VXX , or even doing a very bad job at tracking the VXX

This was a deliberate hatchet job - and somebody got real fat fucking the investors today

Once this goes mainstream public, all ETF's will suffer .


Thu, 03/22/2012 - 16:22 | 2281705 amadeusb4
amadeusb4's picture

To make a few points. I agree with this being a hatchet job.

How will this get resolved when issues are started up again? Price should pop to NAV within the day. Also, I don't see CS doing this. Why implode your product in a day and drive out investors, er bagholders, when you can nickel and dime them over time as has been the preferred ETF method since their inception. I see someone doing this for fun and profit. The opportunity opened up the day issues were halted and while it's something I considered, I never thought I'd take a 15%, no make that 20%, no make that 30%.... and going bath in a single day. I thought premium might evaporate and there may be a 10% correction during a down VIX day or something like that. Nothing like this. The "buyer beware" copout on CS's part doesn't cut it. If this doesn't pop back to NAV with new issues, expect torches and pitchforks to come out. There will be plenty of eager class action lawyers and ambitious AG's willing to take this kind of high profile case on.

Thu, 03/22/2012 - 16:26 | 2281718 TradingJoe
TradingJoe's picture


Thu, 03/22/2012 - 16:31 | 2281736 devo
devo's picture

But class action lawsuits always benefit the criminal. If they pay out 50mil but bank 500mil as this thing collapses to 0, then who wins? The individual investor might get a few hundred bucks back. The CS brand is forever tarnished and they just destroyed all volatility indexs forever (and possible all inverse ETFs), but do they care? As always, there will be a heirarchy of who is made whole.


Thu, 03/22/2012 - 16:34 | 2281755 HarryM
HarryM's picture

Thanks for the kind words - I managed to dump at a liitle over $12.00

Below $10 now in ET

Is your advice to hold and wait for bounce back

Why wasn't trading stopped?



Thu, 03/22/2012 - 16:41 | 2281771 devo
devo's picture

I think you should take Jim Rogers' advice and sell if/when the pain is just too much.

It's the best and simplest advice I've ever heard on selling/holding.

Fri, 03/23/2012 - 01:08 | 2282672 amadeusb4
amadeusb4's picture

Let's assume TVIX starts issuing shares again at 9, then VXX would need to gain about 30% to ~24 in order for TVIX to return to 14.4 where it closed yesterday. This is almost a certainty. It is just a matter of time. Now, how much profit you are going to make over that is a different question but the kind of shitstorm that's about to ensue when the US enters a recession is going to make last summer look like the good ol' days. Decay and all that aren't going to matter. We're quibbling over 4 pts here when VIX will test the 50's in late fall 2012.



Thu, 03/22/2012 - 16:08 | 2281629 Undecided
Undecided's picture

Unbeleivable how they killed in 5 mins at the end of the day was up almost 12% finished up just over 2!

Thu, 03/22/2012 - 16:11 | 2281646 walküre
walküre's picture

The companies that "manage" these products are all shysters. Be warned. They're the top scum on the shyster galerie. Maybe 2nd only to loan sharks or collection agencies. Glorified scum and thieves. All of them!

Consider yourself FLASH CRASHED

Thu, 03/22/2012 - 17:30 | 2281893 fonzannoon
fonzannoon's picture

Your comment flies under the radar walk but you are 100% correct.

Thu, 03/22/2012 - 16:20 | 2281700 Piranha
Piranha's picture

short term volatility can be both up or down regardless the index, however TVIX has been a broken instrument for trading short term volatility for some time now and price action today was just sick since the movement were only down. CS should not let this trade at all being broken like that. 

Thu, 03/22/2012 - 16:36 | 2281760 HarryM
HarryM's picture

This was not a VXX tracking error

Fri, 03/23/2012 - 00:18 | 2282594 GoinFawr
GoinFawr's picture

! Red Hot effin' Potato ! 'Some time now' <damn> Hippocratic oaf indeud. Lizzy knows...

Thu, 03/22/2012 - 16:21 | 2281701 GMadScientist
GMadScientist's picture

Go go go....margin some options for the double inverse ETF of an index tracking the implied volatility of S&P options. LOL

What a fucking clown parade.

Thu, 03/22/2012 - 16:23 | 2281707 monopoly
monopoly's picture

TVIX got me today. Had a position, closed it for a large loss. Thank goodness position was small. I now swear off of all 2x crap. Just not worth it. 

Oh well, just part of the process. Tough market for sure.

Thu, 03/22/2012 - 16:28 | 2281728 TradingJoe
TradingJoe's picture

so sorry! you should know that the VIX is as manipulated as the rest of the "market", its a CBOE!!! PRODUCT!!!

Thu, 03/22/2012 - 16:53 | 2281803 monopoly
monopoly's picture

Yup, you are so right. No one to blame but myself. I am now cured. lol.

Thu, 03/22/2012 - 16:48 | 2281789 Greater Fool
Greater Fool's picture

Trading in an ETF that's that far off its NAV is just asking for it. ETF / ETN sponsors are required to publish it for a reason.

Thu, 03/22/2012 - 16:58 | 2281813 monopoly
monopoly's picture

Yup. did not do enough research on it. I was off the mark. I never, ever blame anyone or anything else for a bad trade. Never make excuses. I fucked it up. And now that is over!

Lets see what tomorrow brings in this wonderful, honest, correct and all knowing market.

Thu, 03/22/2012 - 17:04 | 2281830 Greater Fool
Greater Fool's picture

Ha--I didn't say you couldn't make money at it, just that you're likely to be playing a game you don't understand. When I take the top off a bottle labeled "beer" and what's inside smells like gasoline, some might drink it anyway, some might pour it into their car, and either of them might be happy with the result. I prefer to let others try such experiments....

Thu, 03/22/2012 - 18:23 | 2281988 NotApplicable
NotApplicable's picture

Let's get Mikey to try it. He hates everything!

It's weird enough that your comment prompted that thought. What's weirder though, is that there's a Wikipedia page for it.

Fri, 03/23/2012 - 02:21 | 2282604 GoinFawr
GoinFawr's picture

-who sent for the clowns?

IMO anyone big enough to login to ZH and own up to a mistake like this is worth ten thousand who jump up to say 'they won this' or claim 'they beat that' with their bsd's.


Thu, 03/22/2012 - 17:33 | 2281905 Assetman
Assetman's picture

It wasn't the 2x crap moreso than issuer's reluctance to issue new notes to match NAV.

The good trade would have been to short the TVIX, while going long UVXY (a similar ETF that does reset to close to NAV), as the premium of the former to the latter was well beyond 35% coming into today. 

UVXY (and VXX for that matter) took their beatings from March 1 until March 21.  Today, UVXY was up +2%.

Either way, don't invest in any of these things until you have a very good understanding what drives them.

And even if you do know, there's still a good chance you'll be dead wrong.

Fri, 03/23/2012 - 00:06 | 2282608 Artful Dodger
Artful Dodger's picture

Holy shit - in this entire comments forum, one or two people state the obvious. Buy 80% over NAV and not expect any problems? The thing's STILL expensive!

Thu, 03/22/2012 - 16:29 | 2281730 Hallpass2012
Hallpass2012's picture

credit suisee should expect some .45 slugs coming at them, this is stealing

Thu, 03/22/2012 - 16:51 | 2281796 Greater Fool
Greater Fool's picture

What, so when CS is freely telling you that its intrinsic value is X and the market value is, for some reason 2X, you go after CS when the market value reverts?

It's not stealing when you open up your wallet on the subway platform, toss a handful of Benjamins in the air, and don't get all of them back.

Thu, 03/22/2012 - 16:31 | 2281745 JailBank
JailBank's picture

Ass hammered by the TVIS with some of the others. I am done with the markets. Keeping my small stake in AG and walking away with my silver holdings bureid in the backyard.


Screw you guys I'm going home.

Thu, 03/22/2012 - 16:39 | 2281768 eBuddha
eBuddha's picture

all these g.d. ETFs and ETNs are fking up the futures pits.

the futures pits were not meant for the kind of size that is available in the equity markets.

they stopped creating new shares b/c they already owned 80+% of the fking VIX futures (which is why back month VIX futures are 8 points higher than the front month).

the same is happening in OIL - ETFs / ETNs should not be allowed to own futures contracts.  They are distorting the markets.

Thu, 03/22/2012 - 18:26 | 2281995 NotApplicable
NotApplicable's picture

According to Keynesian theory, markets exist in order to be distorted. Looking at Wall St. bonuses paid last year, it is still working.

Thu, 03/22/2012 - 16:43 | 2281776 fonzannoon
fonzannoon's picture

I thought I would feel like shit today getting creamed and closing out my account. Instead I feel pretty damn good. It's true especially with these products today the only way to win is not to play. Let these mfkers fleece themselves from now on.

Thu, 03/22/2012 - 16:48 | 2281788 Comay Mierda
Comay Mierda's picture


Thu, 03/22/2012 - 17:49 | 2281932 walküre
walküre's picture

At least you get that BIG FAT 1.6% DIVIDEND!!!

Thu, 03/22/2012 - 18:14 | 2281976 junkyardjack
junkyardjack's picture

A wise investment my good sir

Thu, 03/22/2012 - 16:53 | 2281801 tekhneek
tekhneek's picture

I'm holding onto my UVXY, but it's a tiny position by anyones standard.

Thu, 03/22/2012 - 16:55 | 2281805 bankofvol
bankofvol's picture

Put on the same 5 years Chart UNG anf GAZ and you will understand why GAZ is going to follow the path of TVIX soon. GAZ has outperfomed UNG by 90% over 5 years while they tracking an equivalent (yet not strictly the same) underlying. GAZ 80% premium to NAV.

Thu, 03/22/2012 - 16:58 | 2281815 J 457
J 457's picture

Bankofvol- How do i get GAZ vs NAV?

Thu, 03/22/2012 - 17:05 | 2281831 J 457
J 457's picture

Nevermind, looks like its premium is about 100% over NAV at 2.44.

Thu, 03/22/2012 - 17:10 | 2281838 bankofvol
Thu, 04/26/2012 - 17:34 | 2378200 Darkness
Darkness's picture

what should I be looking at? Natural Gas is priced low right now...?

Thu, 03/22/2012 - 17:11 | 2281840 Darkness
Darkness's picture

Time to buy?

Thu, 03/22/2012 - 17:19 | 2281862 unrulian
unrulian's picture

I think i'll take this opportunity to 3X my Silver

Thu, 03/22/2012 - 17:19 | 2281864 Godisanhftbot
Godisanhftbot's picture

only a bona fide retard would have held this long vs its intrinsic.


no pity for tards.

Thu, 03/22/2012 - 17:22 | 2281870 Godisanhftbot
Godisanhftbot's picture

seriously, if you lost money in this, you are a danger to yourselves and your loved ones.


 consider checking in to the nearest asylum permanently

Thu, 03/22/2012 - 19:27 | 2282092 tmosley
tmosley's picture

Well I don't see how staying exactly where they are is going to help matters.

Thu, 03/22/2012 - 17:29 | 2281886 fonzannoon
fonzannoon's picture

Let me understand this, people who bought and lost money on this should go to an asylum? So if someone made money on this at any point they are all set? How about the companies that issue these to the public? They are fkin stable minded? And the regulators that deem these products fit for public use?

Thu, 03/22/2012 - 17:31 | 2281895 Godisanhftbot
Godisanhftbot's picture

 thats right genius


 this had a kick me sign on it for weeks, only the most ignorant of you were long it. fess up , and try another hobby before you lose it all

Thu, 03/22/2012 - 17:35 | 2281908 fonzannoon
fonzannoon's picture

I fked up, fessed up and am moving on. I was not blind or ignorant. I took a shot and got caught. I can live with it. Thanks for completely missing the rest of my point though.

Thu, 03/22/2012 - 19:29 | 2282097 CvlDobd
CvlDobd's picture

I admire you admitting to this.

I will exclude you from the following comment becasue of your honesty.

The companies that issue them are genius' because they get rich off of idiots who think they are going to get rich off a product DESIGNED to go to zero.

Steve Wynn tells people they will lose money if they enter his establishment and yet they still come in droves and do exactly what he promises. Who is the idiot? Considering I can pull up a stock ticker from his last name, my hunch is that he isn't the idiot in the story.

Thu, 03/22/2012 - 17:31 | 2281897 hangman
hangman's picture

Nothing surprises me anymore... Seeing is believing:

Higher gas price is good for the economy and people

Higher inflation is good for the economy and people

Higher interest rate is good for the economy and people

Slow down in China and EU is good for US

Higher commondity prices are good for the economy and people, etc.

I am sure you guys' been seeing more of these ridiculous and desperate Mupppeting articles-especially on CNBC...



Thu, 03/22/2012 - 17:55 | 2281946 walküre
walküre's picture

Radio Moscow was not even close to delivering the same entertainment value to the downtrodden and downbeat Soviet Russians that knew their lives and the society they lived in were completely fucked.

At the end of the nightmare, there is opportunity. Become friends with high ranking military personnel in the US. When the time comes, you and your friend can orchestrate some major weapon sales to some 3rd world tin pot dictator who will pay in the gold he seized from the large global mining companies.

Gold will be king. Africa's gold rich shitholes will rule the world. Phenomenal!

Thu, 03/22/2012 - 17:52 | 2281942 q99x2
q99x2's picture

I'm an investor not a speculator. I'm in for the long haul. 10 bucks - good time to buy.

Thu, 03/22/2012 - 19:31 | 2282101 CvlDobd
CvlDobd's picture

Did you miss the part about it being intended to go to zero? Do you really think TPTB are going to let you lever up and beat them at their own game?

Thu, 03/22/2012 - 17:52 | 2281943 Titanic any 1
Titanic any 1's picture

Add me to the slaughter, I bought right @ 11.80, then next thing u know its 10 f'in dollars literally 14 minutes later, dipped in and out for the last 1 1/2 hours recoupped about 7 pct still down about 14 pct and like a good bag holder still holding a large position, by cob tomorrow this fkr better be 15 bucks, if not titanic any 1

Thu, 03/22/2012 - 17:54 | 2281947 wretch
wretch's picture

In response to those who disparage holders of TVIX (or any ETF) as retarded and deserving of their losses today: you're not going far enough.  We have an ethical responsibility to resist participating in the crimes being perpetrated by these sociopathic financial terrorists.  Stop playing their genocidal games, you greedy fucks.

Thu, 03/22/2012 - 17:59 | 2281953 fonzannoon
fonzannoon's picture

I agree with your point about stop participating in these games. However It was play money for me and someone took it today. It's called life and shit happens. Anyone on here who got creamed today and is crying about it did not know the rules. I knew what I signed up for. So as for disparaging remarks you and anyone else on here who engage in that can just go eat a dick. Go ahead. Eat it.

Thu, 03/22/2012 - 18:13 | 2281975 dwdollar
dwdollar's picture

Just think, that money could have been invested in a garage start-up or gone to a charity. Now it belongs to someone who will likely use it for hookers and blow.

Thu, 03/22/2012 - 18:16 | 2281982 fonzannoon
fonzannoon's picture

I was thinking I could have just used it for hookers and blow and then you had to go ahead and make me feel like double shit.


Thu, 03/22/2012 - 18:10 | 2281973 Awakened Sheeple
Awakened Sheeple's picture

You know wretch that's an interesting point. I was thinking the same thing yesterday that we bears have somehow lost our way during this rally. Perhaps we should stick with what may help burn this rigged game down. I may just use this opportunity to BTFD in physical silver.

Thu, 03/22/2012 - 17:56 | 2281949 FinLen
FinLen's picture

Do you guys think the VXX will blow up also?  I bought the low today...

Thu, 03/22/2012 - 19:59 | 2282147 devo
devo's picture

It depends on the NAV and when they turn over the options. I believe mid-month, so you're facing time decay if you don't get the volatility "pop"...

VXX might experience selling with all the negative pub TVIX is receiving, too.

I'd suggest reading the prospectus and trying to understand the vehicle. It's a speculation/day trading vehicle, not something to buy because the "the Vix is low so it must spike."

Good luck

Thu, 03/22/2012 - 18:02 | 2281954 Awakened Sheeple
Awakened Sheeple's picture

The premium issue in TVIX scared me out of it. The "what if" factor was more than I could handle. Plus hearing the noise about how the VIX etns were "becoming the VIX market" gave me the feeling that the bottom was about to fall out. Sorry to hear that you guys got buried. I've been trading VIX etns for 7 weeks and managed to break even. Guess I got lucky..

Thu, 03/22/2012 - 18:28 | 2281997 Dr. Gonzo
Dr. Gonzo's picture

Ha. I bought TVIX at $50 during one of the Greek default climaxes. The plan was to be greedy and trade it on a daily basis but it didn't quite work that way. Was close to bailing at $30 but too painful. It's been dead money to me for quite awhile. I let them rob me months ago. Lesson learned. For God sakes don't get into these ETF's! Even now at $10 it could go to 3 or lower.  It's money down the toillet. Jon Corzine is probably managing it for Credit Suisse.

Thu, 03/22/2012 - 18:50 | 2282024 cosmictrainwreck
cosmictrainwreck's picture

wonder if you did the same calculations I did, cause that's what I got for "target".... $3. That is based on 3 months if it had tracked as 2x VXX, as it's 'posed to. Th eoptimistic target (on a one-month basis) is $7.48. Again, theory vs. VXX.

IOW...waeren't no "debacle" or "suspension of reality"...just catching up to reality at many days over-valued. Didn;t hear no squawking when TVIX failed to fall with VXX

Thu, 03/22/2012 - 20:07 | 2282164 devo
devo's picture

For God sakes don't get into these ETF's!

They are actually ETNs.



Thu, 03/22/2012 - 19:06 | 2282056 overbet
overbet's picture

Does anyone know what the catalyst was for this move today? The news to halt new shares was announced Feb 21st so thats not it.


Fri, 03/23/2012 - 17:30 | 2285106 ZeroPower
ZeroPower's picture

Halting does not equal creating (i.e. market making).

The halt was back in Feb, the un-halt (leak) was just yesterday. Hence the drop, to get back to NAV.

Thu, 03/22/2012 - 19:19 | 2282080 Wixard
Wixard's picture

A rumor article I read said that a large hedge dumped it out today, and so caused it to freak out.


Suppossedly they also dumped some VXX

Thu, 03/22/2012 - 19:45 | 2282122 chump666
chump666's picture

Either way, if you are in the market you got to leverage up.  A lot of traders missed the 2012 meltup, bought on topped out ranges and hope for continued bull market (which is not going to happen i,e oil price and the market 'concerned' about inflation, yields going up, war etc).  So you wait for topped out ranges and short or bet on volatility.  Credit Suisse not issuing more TVIX shares was a warning sign, but it is still a debacle as ZH points out.


Thu, 03/22/2012 - 20:10 | 2282167 devo
devo's picture

It's down another 10% after hours. Just saw a huge drop from 5% to 10%.

This is incredible. Looks like it's going to 7 tomorrow. My poor brother (literally) bought this thing about a week ago, despite my telling him not to touch it.

Thu, 03/22/2012 - 20:28 | 2282174 curious1
curious1's picture

Can someone please explain how NAV of TVIX dropped to 7.63/83 so quickly? Can NAV value increase also as quickly? And if CS restart issuance, will it increase the NAV or reduce the NAV?

I would greatly appreciate any insight you could offer. I took a big haircut today. In afterhours - the last trade was at $8.99 (closed at $10:20).

Thu, 03/22/2012 - 20:51 | 2282257 devo
devo's picture

Can someone please explain how NAV of TVIX dropped to 7.63/83 so quickly?

I'd imagine because it was trading at an unwarrented premium.

e.g. uneducated speculator says, "There's a lot of risk, VIX should spike soon" and buys TVIX--those speculators drive up the price (i.e. premium). Big fund sees that, sells their hedge position for a profit. TVIX crashes.

That's my guess. It's probably more complex and sinister.

It can increase quickly if there's bad news and subsequent demand, but I'm sure people will be skeptical to buy now, thus taming any spikes.

Thu, 03/22/2012 - 21:01 | 2282280 curious1
curious1's picture

Thanks Devo. I just checked investor hub - some ppl are saying limited issuance is good (for squeeze) and others say it does not matter. I am scratching my head to hold or not.. I can bear the pain but not sure if it is a good idea if NAV falls down further. I think I unlearned my lesson that I learned by losing my shirt on SDS and SRS 2 years ago. Twice burn, I think I will read the prospectus or just stay away from all these financial innovations :)

Thu, 03/22/2012 - 21:31 | 2282342 devo
devo's picture

No problem. I'd base whether you hold or sell on how well you're sleeping. If it's consuming your life and you need the money, get out. Good luck, man.


Thu, 03/22/2012 - 20:30 | 2282208 curious1
curious1's picture

Was this the reason - it dropped so much: Direct from CS's mouth: Are they shafting or helping TVIX holders? Anyone?

Credit Suisse Plans to Reopen Issuance of VelocityShares Daily 2x Long VIX Short-Term ETN (ticker symbol:"TVIX") on a Limited Basis

Thu, 03/22/2012 - 21:07 | 2282296 Awakened Sheeple
Awakened Sheeple's picture


Word must have gotten out..early.

Thu, 03/22/2012 - 21:08 | 2282297 lizzy36
lizzy36's picture


Hilarous. How many people were trading ahead of this today.

What a shit show.

Thu, 03/22/2012 - 22:06 | 2282395 Awakened Sheeple
Awakened Sheeple's picture

I can't stop laughing when I think of Tyler's widow maker line.. We were forewarned!

Thu, 03/22/2012 - 21:05 | 2282290 jackinrichmond
jackinrichmond's picture

TVIX is a wealth extraction scheme.  the purveyors of this product should be examined closely by the SEC...


..  lol..  like thats ever gonna happen..

Thu, 03/22/2012 - 21:36 | 2282353 devo
devo's picture

TVIX is a wealth extraction scheme.

I agree. By resetting daily and using an option's theta (time decay), they can "death by a thousand paper cuts" unsuspecting traders. Leveraged speculators get the "death by 100 stabbings" treatment. Buyer beware. The thing is, I'm not sure it's fraud since every inverse prospectus I have read essentially admits the "investor" will go broke if the instrument is held long-term. So, there is a personal responsibility issue here, too.

Thu, 03/22/2012 - 21:10 | 2282300 Hallpass2012
Hallpass2012's picture

the whole market is rigged... "Wall Street wants to create an investor friendly market" yah bullshit, the whole market is being rigged by the Fed's ultra loose monetary policy, lets see those cunts raise rates, oo thats right the US is addicted to cheap credit and more of it... do people realize the shear significance of this? a large part of the U.S. economy based on credit, once it stops it is going to socially destabalizing... & to use that argument to keep it going is rediculous... QE3,4,5 coming our way, QEn coming our way... I am buying a medium sized farm in the country side...

Thu, 03/22/2012 - 22:15 | 2282407 SolidSnake961
SolidSnake961's picture

Credit Suisse: All your money are belong to us!

Thu, 03/22/2012 - 22:21 | 2282418 fonzannoon
fonzannoon's picture

So lets put a bow on this...So the company that issues the shares announced TONIGHT that they will be issuing more shares on a limited basis. SOMEHOW some large hedge fund(s) FOUND OUT this information ahead of time and DUMPED their holding...

I'm not saying people who lost should not have...but holy fkin illegal....

Thu, 03/22/2012 - 22:43 | 2282451 zebrasquid
zebrasquid's picture


Thu, 03/22/2012 - 23:12 | 2282520 Vegas Deline
Vegas Deline's picture

The NAV on this turkey is only $7.83, which means it still trades at a 20%+ premium. UVXY trades only slightly higher than its NAV. UVXY has been dropping for weeks (today being an exception) while TVIX seemed immune to the declining VIX. Now it looks like it is making up for lost time.

Fri, 03/23/2012 - 02:48 | 2282735 Assetman
Assetman's picture

That's a very clean and concise view of it, Vegas.

But it's not like UVXY is making up for lost time.  It is just trading closer to an actual underlying value based on futures one month out.  UVXY and VXX are still exposed to the contago effect of the futures, which can make the underlying risk volatility bet a very expensive one.  As such, investors are still not getting into the UVXY 'cheap'.  It's just at a more representative price/value than TVIX.

As for the TVIX, the handwriting was on the wall when the share issuance went away.  When you have an instrument that trades like a closed-end fund, which essentially what TVIX is... the value will be based on the supply and demand for the remaining shares of that fund-- not on the underlying net asset value of the index it represents.  

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