Many people at the trading desks have been getting questions about why the TVIX VelocityShares Daily 2x VIX Short Term ETN (NYSE:TVIX) is down 30% while the VIX was up 3% today. Since the ETN is supposed to increase at 2x the rate of the VIX, TVIX should have been up 6%.
ValueWalk spoke to some people at the trading desks, who specialized in ETN/ETFs, and the answer is that they didn’t really have a good answer. The best explanation was as follows:
The first London Value Investor Conference was held in April 2012 and it has since grown to become the largest gathering of Value Investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19th, Simon Brewer, the former CIO of Morgan Stanley and Senior Adviser to Read More
On 2/21 Velocity Shares halted creations of TVIX, which essentially made it a closed end fund no longer really related to the underlying index. Apparently, the premium shot up a lot last night (again, they are not too sure exactly why), and has just come in to more “normal levels” today. However, we will report more when/if we get a better answer.