Credit Suisse Throws Volatility Fund TVIX a Lifeline

ETF Trends

Credit Suisse has decided to rescue VelocityShares Daily 2x VIX Short-Term ETN (TVIX) with a reverse share split before the volatility-linked exchange traded note loses all its value.

The bank announced it will implement a 1-for-10 reverse split effective Dec. 21, according to a press release.

TVIX is designed to replicate the performance of CBOE Volatility Index futures contracts with 200% leverage on a daily basis. The ETN has fallen 97% this year and has dropped below $1 a share. The reverse split will boost the share price.

There has been speculation that Credit Suisse, the issuer, would allow TVIX to fall to zero. “Without a reverse stock split TVIX will be eroded down towards zero by contango,” said Vance Harwood at Six Figure Investing. [Volatility ETFs: Is TVIX Going to Zero?]

“I had pretty much given up on TVIX because its price had slid way past the logical reverse split point and has traded below $1 for the last 16 trading days,” Harwood wrote in a blog post Monday. “However instead of fading to black TVIX will soon be back into a reasonable trading range. In addition to a reverse split it appears that Credit Suisse has been working on TVIX’s tracking problems.”

VelocityShares Daily 2x VIX Short-Term ETN

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The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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