How The VIX ETN Lost 50% In 48 Hours
As the ETF industry has rapidly expanded, so too have the options investors have for slicing and dicing markets. One of the most popular innovations in recent years has been the ability to access volatility through the exchange-traded structure; there are now multiple ETPs for gaining exposure to VIX contracts, including a number of inverse and leveraged notes and funds. The past week has seen some bizarre developments in one of the most popular VIX ETNs, offering a lesson in the potential dangers in dabbling in exchange-traded products whose “creation mechanism” has been temporarily switched off. TVIX In Focus The VelocityShares Daily 2x VIX Short-Term ETN (TVIX) offers leveraged exposure to VIX contracts; the note is linked to an index comprised of front month futures with a 200% leverage on the movements in volatility. As such, TVIX is obviously a risky product; it is not uncommon to watch it move [...] Click here to read the original article on ETFdb.com. Related Posts: Three ETFs Trading At A Huge Premium To NAV (And Three Alternatives) Six Noteworthy ETF Innovations New VIX ETFs Hit The Market Three ETFs To Watch This Week: EWCS, IAU, TVIX Daily ETF Roundup: GDX Soars On Gold’s Glitter, TVIX Loses Another 30%
As the ETF industry has rapidly expanded, so too have the options investors have for slicing and dicing markets. One of the most popular innovations in recent years has been the ability to access volatility through the exchange-traded structure; there are now multiple ETPs for gaining exposure to VIX contracts, including a number of inverse and leveraged notes and funds. The past week has seen some bizarre developments in one of the most popular VIX ETNs, offering a lesson in the potential dangers in dabbling in exchange-traded products whose “creation mechanism” has been temporarily switched off.  TVIX In Focus The VelocityShares Daily 2x VIX Short-Term ETN (TVIX) offers leveraged exposure to VIX contracts; the note is linked to an index comprised of front month futures with a 200% leverage on the movements in volatility. As such, TVIX is obviously a risky product;  it is not uncommon to watch it move [...]

Click here to read the original article on ETFdb.com.

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