In spite of its name, XIV is not the inverse of the VIX index—it is the daily percentage inverse of an index called SPVXSP, which you can monitor on Bloomberg here. This index very closely tracks the same index that VXX uses, SPVXSTR. Last week XIV did not track VXX’s daily moves particularly well. There has been a lot of speculation about what was causing …
This morning I put a credit spread in place, selling August VIX $15S calls and buying $47.5S calls for a net credit of $18.2. The underlying for these calls is the August volatility futures—not the VIX itself. The effective price of the underlying for these options was about $34 at the time. The VIX was around 42. Normally the shortest term volatility futures are cheaper …
As far as crashes go, this one has been pretty orderly. Volume continues to be heavy, which I see as one of the few encouraging sign. Ironically Treasuries are up—but lower than investment grade paper is getting hammered. Obviously the big fear is a recession—but without any real news, similar to the Japanese earthquake/tsunami/reactor meltdown correction. VIX is at 44 right now. …
It’s tempting to look for a fast recovery for a market blow-off like this that doesn’t have any obvious big economic drivers. But it’s rare to see “V” shaped recoveries when fear gets this high. I’m expecting the market will need to form a bottom here before there can be a sustained rally. At least a couple more down days are probably in …
I understand how stock splits, forward and reverse can confuse novice investors, but I was shocked to see Reuters Money publishing a guest post titled: “An inside look at a bad stock trade.” This investor’s analysis of VXX’s 4:1 reverse split was: “Such a split means that investors would have one-fourth of the shares they owned before the split, but at four times the …
