Volatile stocks spark record one-day rise in fear index

09 February, 2018, 05:23 | Author: Salvatore Jensen
  • Stocks slumped again on Monday extending the volatility that emerged last week as investors grew more worried about turmoil in the bond market

And it's gonna be an even greater trade going forward, according to Credit Suisse: "History shows that investing following spikes in Volatility tends to lead to above average returns", the strategists wrote, pointing to data on buying into those two stock indexes when volatility is elevated.

The VIX, however, is not an actual measurement of volatility.

During the market implosion on Monday, you may have heard the word "volatility" quite a bit. That's right, you can't, because the kind of volatility exemplified by 1,100-point DJIA drops has the nasty side effect of killing low-volatility bets.

24/7 Wall St. wanted to outline just how complicated the world of volatility and the "short volatility" can be. Exchange traded notes are unsecured and unsubordinated debt securities issued by an underwriting bank. We also have outlined some strategic calls from analysts and advisories for those investors who are interested in looking through the mess to the other side. Despite the name, CCI can be used on other investment tools such as stocks.

USA stocks, which triggered the global reversal on Friday when payrolls data showed a spike in wage inflation, suffered their worst fall since August 2011 on Monday. And the ProShares Short VIX Short-Term Futures ETF plunged 85%. Currently, VIX Mid-Term Futures ETN Ipath (VXZ) has a 14-day ATR of 0.74. Fundamental analysis takes into consideration market, industry and stock conditions to help determine if the shares are correctly valued. Many traders will use a combination of moving averages with different time frames to help review stock trend direction.




The trading range for the VIX, or the Cboe Volatility Index, on Monday was 17 points, much wider than the 10-point range the day global markets were shaken by Britain's vote in June 2016 to leave the European Union. Their take was that the market computers functioned normally from the high-speed trading firm. The NYSE listed company saw a recent bid of 48.31 and 20173437 shares have traded hands in the session. That CNBC video can be seen here.

On Tuesday, Credit Suisse AG, the issuer of XIV, exercised its discretion and announced the redemption of the 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 February 15.

The intensity of the selloff drove traders to the options market and trading volume surged to 35.5 million contracts - the third busiest day ever and the busiest day since August 21, 2015, according to options analytics firm Trade Alert. 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.

As of this writing, both XIV and SVXY were halted for trading, but were expected to resume trading later in the day. However, ForexLive went ahead and calculated that Credit Suisse may have incurred a more than $500 million loss.

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