Can UVXY/TVIX "malfunction" like XIV and SVXY?

Why allllll of the sudden are people talking about how bad these investment vehicles are yet nothing was done prior to this to delist them and shut them down...when everything is peaches and cream and rainbows and butterflies everyone is hush hush and quiet but as soon as a problem arises they talk hate and negativity against the the very thing they loved and cherished.....

Cramer rails against VIX trading products: They are 'practically designed to fail'
  • "Mad Money" host Jim Cramer reviews the market sell-off, focusing on the volatility trading that he says accelerated the losses.
  • Cramer says that trading vehicles like the XIV are "reckless" and "should not be allowed" in the market.
Elizabeth Gurdus | @lizzygurdus


https://www.cnbc.com/2018/02/06/cramer-vix-trading-products-are-practically-designed-to-fail.html
 
S2007S said:
Why allllll of the sudden are people talking about how bad these investment vehicles are yet nothing was done prior to this to delist them and shut them down...when everything is peaches and cream and rainbows and butterflies everyone is hush hush and quiet but as soon as a problem arises they talk hate and negativity against the the very thing they loved and cherished.....

Cramer rails against VIX trading products: They are 'practically designed to fail'
  • "Mad Money" host Jim Cramer reviews the market sell-off, focusing on the volatility trading that he says accelerated the losses.
  • Cramer says that trading vehicles like the XIV are "reckless" and "should not be allowed" in the market.
Elizabeth Gurdus | @lizzygurdus


https://www.cnbc.com/2018/02/06/cramer-vix-trading-products-are-practically-designed-to-fail.html
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Thats how media catches people attention.
 
S2007S said:
It would be totally free money....even if you held onto vxx for 5 years under 10 you know eventually it's going to surge 3-4 fold in due time....

As for the other vix products they don't work as good as they should.....when you are tagging a product to the futures far out in advance they never seem to work out as they should... hence backwardation and contango.....

As for xiv shutting down....it shouldn't....they should keep it ipeo after the collapse and let it run the way it has.....
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So short vxx is closer to short vix future comparing xiv kind of etf? I did some basic math and the risk for vxx to crash would be opening with vix future start with 100 then drop to 10 something within a day. Dont look logical in any situtation. It is like super scary mood to super peaceful mood in a day.
 
Maverick, I'm not sure I agree with the assertion that "when you are in the inverse ETF you are locking in losses everyday."

I mean, the chart of SVXY pretty much negates that idea, doesn't it? Yes, the drawdowns can be significant (or "huge" as in the case of today) but it definitely has a general tailwind. I have traded SVXY profitably for quite some time now, admittedly in a low-vol environment with contango helping out, but that's part of the deal. You have to pay attention to the structure of the futures. Furthermore, I just buy calls (and sometimes hedge with long puts as I did yesterday). I simply cannot be wiped out because I rarely have as much as 10% of my capital tied up in it. Theta is real, though.
 
jimmyjazz said:
Maverick, I'm not sure I agree with the assertion that "when you are in the inverse ETF you are locking in losses everyday."

I mean, the chart of SVXY pretty much negates that idea, doesn't it? Yes, the drawdowns can be significant (or "huge" as in the case of today) but it definitely has a general tailwind. I have traded SVXY profitably for quite some time now, admittedly in a low-vol environment with contango helping out, but that's part of the deal. You have to pay attention to the structure of the futures. Furthermore, I just buy calls (and sometimes hedge with long puts as I did yesterday). I simply cannot be wiped out because I rarely have as much as 10% of my capital tied up in it. Theta is real, though.
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No, only when it's in backwardation. When it's in contango, you are locking in profits and the long vol guys are locking in losses. That's why perpetual vol drifts lower over time.
 
Vxx is around 43 now and vix future 25. If vix future instantly drop half to 12 which was around the price before the 1100 dows drop day, then vxx would be around 22 which is even lower than vxx price before big vix spike day.

Look like xiv kind of inversed etf provides the most 100% lose advantage but can be bust, while short vxx can "gain it back"
 
I think about it and the main different is

Short vxx basically would not be crashed. Super bad day or time with vix future around 100 is very hard to suddenly become 20 or below in a day. Even it does it is short vxx advantage

Comparing to xiv or svxy you know what happen

And vxx drop much faster than xiv or svxy raise normally.
 
Saltynuts said:
I realize that being long UVXY/TVIX is bad in the long term, given that they will always fall given enough time, and that shorting them is extremely risky given that they can skyrocket at any time.

But I'm curious - can they essentially "malfunction" like XIV and SVXY did? Like can they go to a trillion or negative trillion?

Thanks.
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Seems like a decent way to bet on a rising VIX via ETFs is to short products like XIV and SVXY and maybe you'll get a termination event.
 
S2007S said:
Why allllll of the sudden are people talking about how bad these investment vehicles are yet nothing was done prior to this to delist them and shut them down...when everything is peaches and cream and rainbows and butterflies everyone is hush hush and quiet but as soon as a problem arises they talk hate and negativity against the the very thing they loved and cherished.....

Cramer rails against VIX trading products: They are 'practically designed to fail'
  • "Mad Money" host Jim Cramer reviews the market sell-off, focusing on the volatility trading that he says accelerated the losses.
  • Cramer says that trading vehicles like the XIV are "reckless" and "should not be allowed" in the market.
Elizabeth Gurdus | @lizzygurdus


https://www.cnbc.com/2018/02/06/cramer-vix-trading-products-are-practically-designed-to-fail.html
More...

Cramer had no idea what was going on during the afterhours market with XIV so for him to be preaching after the fact is as usual ripe with irony. Maybe he should have been warning people about this product before the termination event. No value add at all.
 
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