VelocityShares Daily 2x VIX ST ETN (TVIX)

[august1991]

From Bloomberg:


Among the 10 most-owned VIX options, nine were betting on volatility gains. April $20 calls, with an exercise level 44 percent above the last close, had the largest open interest, according to the data.

“This earnings season isn’t as cut and dry as previous quarters,” Ioan Smith, a strategist at Knight Capital Europe Ltd. in London, said in an April 5 interview. “Expectations are being reined in somewhat, which may explain to some extent the continued demand for volatility. Given the increasingly uncertain macro environment, then there is a genuine concern that earnings beats may not be as frequent.”

It would be bad news for holders of VelocityShares Daily Inverse VIX Short-Term ETN (XIV) but a boost to the long-declining VelocityShares Daily 2x VIX Short-Term ETN (TVIX), ProShares Ultra VIX Short-Term Futures ETF (UVXY), and Barclays iPath S&P 500 Short-term VIX Futures ETN (VXX).

The last three are picking up fresh assets from nervous investors even though they’ve fallen in value by two thirds (TVIX and UVXY) and one-third (VXX) during 2013 — and can be expected to continue doing so, absent a big (negative) change in markets’ bullish tone.