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by elmar 3050 days ago
The other side of the bet just went bust.

Credit Suisse Fund Liquidated, ETFs Halted as Short-Vol Bets Die

https://www.bloomberg.com/news/articles/2018-02-06/credit-su...

3 comments

The XIV security, which had fallen roughly 85 percent in after-hours Monday, closed down 93 percent Tuesday. (and you think Cryptocurrencies are volatile)

https://www.cnbc.com/2018/02/06/the-obscure-volatility-secur...

"The other side of the bet just went bust."

I don't think it's accurate to say it "went bust". In fact, Credit Suisse had a (oft ignored) provision in the prospectus of the ETN that very clearly stated that they would liquidate and terminate the product if it exhibited certain behaviors.

Credit Suisse built the product "safely" in a way that did not expose them to losses. The "investors", however, who were almost certainly using the ETN incorrectly, were exposed to heavy losses:

https://www.zerohedge.com/news/2018-02-06/xiv-trader-loses-4...

"incorrectly", in this context, would be anything other than very, very short (less than one day) holding to hedge other risks.

Obscure security linked to stock volatility plummets 80% after hours, sparking worries of bigger market effect

https://www.cnbc.com/2018/02/05/xiv-exchange-traded-security...