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North American Energy Partners Inc. Message Board

  • joshsimpson_95066 joshsimpson_95066 Mar 22, 2012 12:27 PM Flag

    Anyone still holding TVIX?

    WTF just happened with this thing? Anyone know why it would be down, and down by 12%, on a day it should be UP??? Color me totally confused!

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    • No, I wasn't, but I'll forgive you. :)

    • Sorry. Having a bad day?

      The person who wrote it clearly has no clue though. If CS were issuing shares there would be little or no difference between TVIX-IV and TVIX regardless of how many people wanted to speculate on CS cutting off issuance again. Had they just bothered to read what CS actually did they would have known that the premium was going to be back in the very near future. I knew it back on 3/23. The fact is CS never started issuing new shares in any significant way, so speculating that they will stop is a little dumb. The premium started creeping back up virtually as soon as they finished scaring all the weak hands out on 3/26.

      I suppose now I'll get too watch the premium blow out only to have somebody spread a rumor that CS is opening issuance again so they can make a big profit shorting it. Is there any doubt why most retail investors are perfectly content to park their money in bonds?

    • The reason I was "messing" with that article, I thought you might be interested in reading it!

      I'll make sure I don't "mess" with post anything on TVIX or the VIX again!

      Your welcome!


    • Why are you messing with that article when I already told you what is happening with it, they are just guessing? CS never reopened issuance except on an extremely limited basis, so there is no need for CS to suspend issuance again for the premium to blow out, they never reopened issuance. It should and would have blown all the way out to where it was before if it weren't for the media slamfest being orchestrated against it. Just wait until the shorts cover, and the premium will be higher than before.

    • Hope one of these links work, if not I'm sure you can figure it out. I have been copying them in my mail & they work just fine, but pasting to the MB, sometimes it does & sometimes it doesn't. It's Google Chrome I'm now using, instead of internet explorer 0r firefox. Chrome is much faster than both.

    • CS reopened issuance on a "limited basis" and it is so limited that there is virtually 0 chance that supply will match demand when the markets fall apart. They can't even do it with the massive media campaign against TVIX dampening demand. They in essence are issuing shares only to those who want to short TVIX, not to sell to investors who want to buy it. With the VIX where it is now, who in their right mind wants to short volatility? Expect the premium to widen again, and to do so dramatically when the shorts cover.

      On that note these media types are stupid. Yes, TVIX will eventually go to 0, but their preferred alternative, puts, will also go to 0 in most cases, and a lot quicker than TVIX is going to. There is a sound recommendation, sell TVIX and buy puts that expire in a few months instead. LOL!

      TVIX does not track the VIX. It is based on a basket of futures. The market for said futures is composed almost entirely of TVIX and other instruments like it, so regardless of whether they issue shares of TVIX or not in reality all these volatility tracking funds are in essence "closed end" funds that are going to deviate from the performance of the VIX, and potentially trade at a premium or discount to it. Does it really matter if the premium (or discount) is shown as a difference to iv or to the VIX or as is occurring now to both?

      If you look at the performance of TVIX compared to the VIX last summer TVIX outperformed the VIX by a large amount while trading at hardly any premium to TVIX-IV. The difference was caused by the closed end nature of the VIX futures market which caused those futures to spike far higher than the VIX as more shares were created by CS creating much higher demand for the futures and causing them to rise much higher than the rise in the VIX would normally have dictated.

      So, at the end of the day if you want to park some money in TVIX and wait for the next shoe to drop, then you will probably be pretty richly rewarded when it does. If on the other hand nothing bad happens, then at some point you are going to lose all your money. Did anybody buying TVIX not understand this simple fact, and expect anything different? I somehow doubt it.

    • I'd stay away from tvix but I guess some people never learn?

    • TVIX Premium to Indicative Value Creeping Back Up…
      If you thought the TVIX (VelocityShares Daily 2x VIX Short-Term ETN) story was behind us, you might want to think again.

      No, I am not talking about the recent news that FINRA is “looking at the events and trading” associated with TVIX and more generally that the regulator has “a review under way looking at a host of issues relating to ETNs and other complex products.”

      Instead, my interest is in the return of some meaningful premium in TVIX relative to its Intraday Indicative Value (a real-time estimate of an ETP’s fair value, based on the most recent prices of its underlying securities) during the last three days.

      For some historical perspective, consider that in the months prior to Credit Suisse (CS) suspending creation units on February 21, TVIX typically traded at a premium of about 0.5% above its indicative value. After the creation units were suspended, the premium vacillated wildly (as seen in the graphic below), though for several weeks the premium was locked in a relatively narrow range of 10-20%. That premium over indicative value spiked to 89% on the day before the announcement that Credit Suisse was resuming creation units. Once that resumption of creation units was announced, the premium in TVIX fell all the way back to 2% in just three days, no doubt signaling to many that it would soon be business as usual in TVIX trading.

      During the last three days, however, the TVIX premium is has remained largely in the 10-15% range, ending today at 11.4%.

      The knee-jerk conclusion here is that there Credit Suisse may be considering the possibility of suspending the TVIX creation units once again. Another interpretation is that while Credit Suisse indicated they would reopen issuance of TVIX “on a limited basis,” it is now likely that the limited flow of TVIX creations units has not been sufficient to establish a price equivalence between TVIX and TVIX.IV, suggesting that an imbalance of supply and demand is persisting. Given the low trading volumes for the last three days, I am inclined to believe the that imbalance is more of an issue of supply constrains than one of excess demand, but here the simple interpretation of the data may not be the proper explanation.

      The fluctuations in the TVIX premium will be very interesting to watch going forward. One could argue that in spite of my many posts on TVIX, including a (pre-suspension) reminder that the pricing supplement to the prospectus states in no uncertain terms, “The long term expected value of your ETNs is zero,” many investors had no idea what they were buying when they purchased shares of TVIX. In the six weeks since creation units were suspended, the public has had a reasonably thorough if sometimes painful education on the matter, even if some of this has come too late to avoid large losses.

      Can this wiser and better educated investor class help to create another huge spike in TVIX premium? I have my doubts, but will certainly be watching in earnest. Remember that anyone who pays a 11% premium over fair value for TVIX should anticipate that the premium will evaporate sometime in the near future and that any short-terms gains will likely have to come in the form of other investors who are willing to pay an even larger premium to own an ETN that is likely to underperform UVXY if the VIX does spike.

      As an editorial aside, while TVIX may be taking it on the chin in terms of publicity, had this product been launched prior to the 2008 financial crisis, I have little doubt that many investors would have been genuflecting in front of it during the terror that gripped the stock market during its transition to a post-Lehman world.

    • Amazing? How much of a loss do you need to learn?
      20% 50%? So glad I didn't listen...

    • sold my tvix stuff 7 to 10 days ago, at a loss of a 3-5 grand. i can't remember. i just have trouble watching losses grow in my account.

      PM's are getting a lift but the miners r really benefiting. this was my speculation yesterday, that for so long money that would normally go into PM miners has been going into PM etf's and etn's.

      The pm bugs believe the etf/etn stuff one day will fail because nothing physical backs them, and by just seeing one looking like it will fail, this makes them lick their chops.

      Oddly enough, i bought the double "etf" silver long this morn. I'm watching it carefully because 31.66 is the silver inflection point. Stays above..long, goes below go short.

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