yesterday market lost 500 points and XIV down 15%. Today market up 300 points and XIV basically flat. am I missing something of is the XIV a faulty instrument?
No way, read the prospectushttp://velocityshares.com/pdf/VelocityShares.ETN.Final.Pricing.Supplement.VIXlong.pdf
You're feeling the effects of backwardation in the vix futures contracts. Once contango resumes it will work the other way (slightly down, flat, slightly up, up big all will make XIV trade up).
how long would such effect last?