Velocityshares Daily 2X Vix Medium Term (TVIZ)

[gldtimer]

XIV Consumed by Vol 'Portfolio Insurance'.

In order to protect their XIV holdings trading bought TVIX like crazy which drove down XIV which caused them to buy even more TXIV....etc. the same mechanism that cause the 1987 market crash interplay between the NY cash market for stocks and the Chicago futures market.

Five minutes after the close the rush of orders had driven down XIV by over 80% and it was terminated since the floor wasn't zero but an infinite negative value. A fail safe if you will.

This leaves the long vols, but kills off the short vols. Be interesting to see if anything takes their place, but I doubt it.

Fortunately I was holding my XIV allocation in cash, waiting for a set up that will now never happen.