Advertisement
U.S. markets closed

  • S&P Futures

    3,932.75
    -23.75 (-0.60%)
     

  • Dow Futures

    31,408.00
    -124.00 (-0.39%)
     

  • Nasdaq Futures

    12,170.25
    -115.00 (-0.94%)
     

  • Russell 2000 Futures

    1,832.40
    -12.20 (-0.66%)
     

  • Crude Oil

    89.27
    -0.28 (-0.31%)
     

  • Gold

    1,715.50
    -10.70 (-0.62%)
     

  • Silver

    17.59
    -0.29 (-1.60%)
     

  • EUR/USD

    1.0026
    -0.0028 (-0.28%)
     

  • 10-Yr Bond

    3.1330
    +0.0230 (+0.74%)
     

  • Vix

    25.87
    -0.34 (-1.30%)
     

  • GBP/USD

    1.1588
    -0.0029 (-0.25%)
     

  • USD/JPY

    139.4790
    +0.4360 (+0.31%)
     

  • BTC-USD

    20,096.65
    -268.59 (-1.32%)
     

  • CMC Crypto 200

    474.57
    -10.13 (-2.09%)
     

  • FTSE 100

    7,284.15
    -77.48 (-1.05%)
     

  • Nikkei 225

    27,673.14
    -418.39 (-1.49%)
     

Focus Turns to Natural Gas ETN Premium After TVIX Crash

tlydon@globaltrend.com (Tom Lydon)

The iPath Dow Jones-UBS Natural Gas ETN (NYSEArca: GAZ) is getting some unwanted attention after the wipeout in VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX) because the natural gas exchange traded note trades at a premium.

TVIX was down an additional 20% Friday after the previous session’s roughly 30% plunge as the ETN’s big premium to indicative value collapsed. The fund’s premium surged as high as 90% earlier this week. [What Really Happened with TVIX]

The natural gas ETN, GAZ, is also trading at a premium – about 46% to indicative value on Friday morning. [Why the Natural Gas ETN is Trading at a Huge Premium]

GAZ was down 6% even though natural gas futures gained ground. U.S. Natural Gas Fund (NYSEArca: UNG) rose about 2%.

The divergence suggests the GAZ premium was falling Friday.

TVIX and GAZ traded at premiums because their issuers, Credit Suisse and Barclays, respectively, halted share creation.

Credit Suisse after Thursday’s closing bell said it would reopen TVIX share issuance on a limited basis.

Stopping share creation can hinder the arbitrage mechanism that keeps the ETN share price in line with the value of the underlying portfolio. Demand for TVIX and GAZ led to premiums because there was limited share supply. ETNs are debt instruments issued by banks designed to pay the return of an index.

After the swift decline in TVIX, traders are wondering if the GAZ premium could be next.

iPath Dow Jones-UBS Natural Gas ETN


Advertisement

Recommended Stories