While You Were Getting 'Terminated' in $XIV, Goldman Made $200 Million in a Massive Volatility Bet

Originally posted at iBankCoin

How lovely. Remember a few months ago when Credit Suisse unceremoniously terminated XIV, depleted the accounts of millions in an after-hours session for the ages. While all of that was happening, muppets getting muppetted, Goldman's trading desk was raking in a fucking fortune -- $200 million to be exact.

Equities sales & trading revenue $2.31 billion, estimate $1.85 billion, up 38% from $1.67 billion.

As Zerohedge points out, Goldman warned of an impending XIV collapse in a note three weeks before it happened.

"VIX ETP rebalancing would be most impactful should there be a quick SPX selloff near the end of a trading day, pushing issuers to rebalance positions quickly to avoid unhedged overnight risk (ETN issuers) or excessive tracking error (ETF issuers). With the rebalancing need primarily driven by inverse products instead of levered long products, a multi-day volatility spike (e.g. VIX futures rise 1-3 points for several days in a row) would be less impactful than it would be with more levered long product open interest, since absent inflows the inverse products would shrink quickly on an initial vol spike (and their vega-buying is limited to the total position they are currently short)." On February 5th, 2018, Goldman's trading desk, led by Managing Director David Casner, made $200 million on its VIX trade. To put that into perspective, the trading desk typically makes $200m per annum and rarely does more than $100m for a day. Last year it happened just 4 times.

It's must be good to be King. Reminder, only 'complete morons' lost money in XIV.

Eat the rich. Go ahead and do it.


chippers Thu, 05/24/2018 - 08:16 Permalink

Fast acting on the behalf of credit suisse,  during the great bankster crisis of 2009 it stopped trading on some of its ETNS at the bottom,  then waited something like 7 years to give the money back to the suckers holding ........  ( note to self never buy a ETN )

Squid Viscous Thu, 05/24/2018 - 08:21 Permalink

hmm, David Casner, another one of those "nice folks next door"...?

(copyright - David Irving)

I'm sure they were bidding up vol, right at the close and in the post market, then poof! XIV and UVXY collapse,

extreme scumbaggery, but hey that's what they're good at

HominyTwin Thu, 05/24/2018 - 10:28 Permalink

Well, why were all these fucking assholes short vol? Fuck em. I'm glad someone made money off their fucking stupidity. Sorry it was a bunch of greasy bankers and not me, but oh well. I lost money trying to short the market while these assholes were getting rich driving vol to sub 10. Then they lost it all. Too bad, so sad.

MrBoompi Thu, 05/24/2018 - 18:59 Permalink

Goldman's "warning" was written in the same central bank gibberish we hear whenever a fed chair gives a report to congress.  These types of statements are provided as cover for the massive profit taking they were expecting, while they knew the whole time only insiders knew what the fuck they are talking about.  When these big boys have taken massive positions, you better watch out if you're on the other side.