The ProShares Short Volatility ETF Lives To Fight Another Day

Following Monday's jaw-dropping after-hours plunge for the VelocityShares Daily Inverse VIX Short-Term ETN XIV, market observers and traders feverishly speculated Credit Suisse CS, XIV's issuing bank, would be forced to terminate the exchange-traded note.

As Benzinga reported Tuesday, “XIV was halted Tuesday, and Credit Suisse subsequently issued a press release saying it will be delivering an irrevocable call notice to The Depository Trust Company for the XIV on Feb. 15. It also named Feb. 21 as the acceleration date for the XIV.”

“On the acceleration date, investors will receive a cash payment per ETN in an amount equal to the closing indicative value of XIV on the accelerated valuation date,” the statement said. “The last day of trading for XIV is expected to be February 20, 2018.”

The XIV fell more than 80 percent and was down another 13 percent Wednesday.

At Least One Survivor

Immediately following XIV's catastrophic after-hours performance, there was ample speculation that other volatility products could also be terminated. Some of that speculation highlighted the ProShares Short VIX Short-Term Futures ETF SVXY. However, ProShares moved to quell that speculation.

Maryland-based ProShares said in a brief statement Tuesday that SVXY's after-hours action on Monday, which saw the product tumble, “was consistent with its objective and reflected the changes in the level of its underlying index. We expect the fund to be open for trading today and we intend to continue to manage the fund as usual.”

SVXY, which had $770.2 million in assets under management at the end of 2017, “provides short exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration,” according to ProShares.

The SVXY was down about 1 percent Wednesday.

Still Popular

Assuming the data are correct, SVXY either remains popular with traders, its slide encouraged dip buying or both. Since the start of this year, SVXY has seen $1.54 billion of inflows as of Feb. 6, according to ETF.com.

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