Hearing the VIX products carnage crushed some Prop Firms

[Clubber Lang]

$21,000,000 loss at one well known Chicago prop firm. Heard they fired a large group of traders yesterday.

$8,000,000 loss at another prop in Texas.

Many stories of individual traders losing high 6 /low 7 figures and wiping out their accounts.

Sorry to hear about the misery.
Best of luck to everyone.

 

[Robert Morse]

I’ve been told that spike in VX future’s was related to the closing of that etf XIV. That the manager in prep to close sent an order to buy 260,000 VIX future’s at the market.

Can anyone confirm this?

 

[Martinghoul]

It's probably true... The extent of the "negative convexity" of ETP issuers was pretty well flagged, though, ahead of time.

 

[2rosy]

$21,000,000 loss at one well known Chicago prop firm. Heard they fired a large group of traders yesterday.

which? not too many now a days

 

[Metamega]

Wonder what the next product “financial engineers” will come up with next. Don’t think anyone really understands the possible complexities of today’s markets. Just keep making derivatives of derivatives and then make some derivitaves on that, then basket them all together, yada yada.

Wish I was trading in the old days when stocks traded in 1/8ths. Sounds like a simple world.

 

[CALLumbus]

Wonder what the next product “financial engineers” will come up with next. Don’t think anyone really understands the possible complexities of today’s markets. Just keep making derivatives of derivatives and then make some derivitaves on that, then basket them all together, yada yada.

Wish I was trading in the old days when stocks traded in 1/8ths. Sounds like a simple world.

But why complain ? Sure some of this stuff is madness, but this madness also gives a good trader so many opportunities. I mean, the volatility of the past 2 days, especially in products like ES and NQ, wasnt this beautiful and traders wet dream ?

 

[beerntrading]

I’ve been told that spike in VX future’s was related to the closing of that etf XIV. That the manager in prep to close sent an order to buy 260,000 VIX future’s at the market.

Can anyone confirm this?

I've wondered this myself. If so, this would be a case of the derivative driving the price of it's underlying...which of course happens regularly, but here it's singularly bad here because there's no VIX assets to give it fundamental underlying value. Like bitcoin without the pretext of currency you may one day be able to spend.

 

[beerntrading]

I’ve been told that spike in VX future’s was related to the closing of that etf XIV. That the manager in prep to close sent an order to buy 260,000 VIX future’s at the market.

Can anyone confirm this?

Bob...a note on this from Merrill is here: https://www.elitetrader.com/et/threads/the-hate-on-xiv-svxy-is-unfounded.317993/page-2#post-4601491

No raw numbers, but a popular line of inquiry.

Also, do you have a chart showing the spike with volume?

 

[zdreg]

I’ve been told that spike in VX future’s was related to the closing of that etf XIV. That the manager in prep to close sent an order to buy 260,000 VIX future’s at the market.

Can anyone confirm this?

XIV is an ETN.

 

[beerntrading]

XIV is an ETN.

...that trades in VIX futures and (presumably) exited their short positions on Monday.