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The other side of the bet just went bust. Credit Suisse Fund Liquidated, ETFs Halted as Short-Vol Bets Die https://www.bloomberg.com/news/articles/2018-02-06/

• elmar 9y ago
  The XIV security, which had fallen roughly 85 percent in after-hours Monday, closed down 93 percent Tuesday. (and you think Cryptocurrencies are volatile) https://www.cnbc.com/2018/02/06/the-obscure-volatility-security-thats-become-the-focus-of-this-sell-off-is-halted-after-an-80-percent-plunge.html https://www.cnbc.com/2018/02/06/the-obscure-volatility-secur...
• elmar 9y ago
  Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect https://www.cnbc.com/2018/02/05/xiv-exchange-traded-security-linked-to-volatility-plummets-80-percent.html https://www.cnbc.com/2018/02/05/xiv-exchange-traded-security...
• rsync 9y ago
  "The other side of the bet just went bust." I don't think it's accurate to say it "went bust". In fact, Credit Suisse had a (oft ignored) provision in the prospectus of the ETN that very clearly stated that they would liquidate and terminate the product if it exhibited certain behaviors. Credit Suisse built the product "safely" in a way that did not expose them to losses. The "investors", however, who were almost certainly using the ETN incorrectly, were exposed to heavy losses: https://www.zerohedge.com/news/2018-02-06/xiv-trader-loses-4-million-and-3-years-work-here-his-story https://www.zerohedge.com/news/2018-02-06/xiv-trader-loses-4... "incorrectly", in this context, would be anything other than very, very short (less than one day) holding to hedge other risks.