There have been so many crazy moves in the market lately. 100%+ gainers, stocks coming out of halts then crashing, and now today we are seeing $XIV being removed from exchanges by the 20th of this month. So what exactly happened? Let's take a look.
Yesterday we saw a spike in the VIX of 17%. Then over the next two hours it ran up another 20% for a final gain of 37% on the day. This normally would have created a great dip buying opportunity to play $XIV and similar ETF's but then came all the after hours margin calls. Traders were forced to or willingly liquidated positions; or so it would seem. In reality the creators of the fund became the majority shareholders by a large margin and acted on pure instinct by dumping off over 4mil shares that they had quietly picked up. This caused a dip of over 80% from the previous market close causing the fund to hit the dreaded 20% mark forcing the fund to close.
Overall there were plenty of positive moves in the market today but we were given a reminder of just how quickly things can change. Volatility can be the friend or the enemy of the investor. It is up to you to decide which side of momentum you want to be on!!