whats happened to VXX +12%
- Thread starter Hookway
- Start date
All I can tell you is, today was the first day I ever carried out a 'weekly' options trade. If things continue the way they are, I may get addicted to this.
The holdings of the VXX ETN are just the front two VIX futures, VX Mar 2022 and VX Apr 2022 at the moment (and Mar is about to expire).
Can anyone help explain why "Barclays does not currently have sufficient issuance capacity to support further sales from inventory and any further issuances of the ETNs."??
"Barclays expects to reopen sales and issuances of the ETNs as soon as it can accommodate additional capacity for future issuances."
(Both quotes from press release, attached.)
Can't they just buy more futures contracts to create more inventory of VXX? I don't see why this would take very long, but maybe there are some mechanics on the bank's side of which I'm unaware? Am I missing something??
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< Can't they just buy more futures contracts to create more inventory of VXX? I don't see why this would take very long, but maybe there are some mechanics on the bank's side of which I'm unaware? Am I missing something?? >
You'd reasonably expect them to explain why they can't just buy more futures contracts and why that isn't an obvious solution. They don't seem very responsible given the amount of money they're managing and the huge fee they take for it.
I read:
It will likely become very difficult to short these products & without shares to short, Authorized Participants can't do arbitrage operations they typical run to drive price down to IV Price.
https://www.zerohedge.com/markets/s...ends-salesissuance-equity-oil-volatility-etns
Re: Another fund, I read:
U.S. financial regulators granted the fund permission on Wednesday to create and sell additional shares.
So, perhaps theres an issue / delay there
You'd reasonably expect them to explain why they can't just buy more futures contracts and why that isn't an obvious solution. They don't seem very responsible given the amount of money they're managing and the huge fee they take for it.
I read:
It will likely become very difficult to short these products & without shares to short, Authorized Participants can't do arbitrage operations they typical run to drive price down to IV Price.
https://www.zerohedge.com/markets/s...ends-salesissuance-equity-oil-volatility-etns
Re: Another fund, I read:
U.S. financial regulators granted the fund permission on Wednesday to create and sell additional shares.
So, perhaps theres an issue / delay there
"Investors poured so much cash into the Teucrium Wheat Fund, WEAT -1.55% which holds futures, that it ran out of shares to sell on Monday. The previous trading day, March 4, the exchange-traded fund issued about 16 million new shares, which was more than the 13 million or so that were outstanding before the invasion. U.S. financial regulators granted the fund permission on Wednesday to create and sell additional shares." - WSJ
Does anyone with industry experience in this area know:
(1) how likely it is that the reason Barclays isn't issuing new VXX and OIL ETN shares is due to regulatory requirements; and
(2) how long it might take for Barclays to obtain permission, purchase futures, and then issue shares?
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MAYBE they looked @ stuff like it being off its 52 week HI by 61% . IF its off by 41% 'cause its up20% today=same thing. Or down almost 90% on longer term chart\oops.
REALLY \sounds like they do not really want to have ''sufficient capacity''
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MAYBE they looked @ stuff like it being off its 52 week HI by 61% . IF its off by 41% 'cause its up20% today=same thing. Or down almost 90% on longer term chart\oops.
REALLY \sounds like they do not really want to have ''sufficient capacity''
VXX isn't meant to be held long term. It's a proxy for short term trades on the near-term, rolling VX futures. Barclays makes money on the fees and hedges out its exposure using futures.
If there is demand for the product, I don't see why they don't fulfill it, unless there are regulatory constraints or unless they have capital constraints?? The regulatory side of creating ETNs is not my area of expertise.
The press release also refers to OIL, which does not have the same futures term structure and consequent long-term decline in price as VXX. I don't think Barclay's actions have anything to do with long term viability or lack thereof for VXX or OIL as investment vehicles. Note also that, as Hookway mentions, something similar happened recently with WEAT.
My guess is that it is regulatory, but I don't know. Does anyone else have knowledge in this area that could help?
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OK\maybe regs;
+maybe the volatility [easy to see that long term or daily]which is why IBKR got out of the option market making business.........