Regardless of whether it made it to the front page of your business section, the biggest news story by far over the last two trading days has been the collapse of the VelocityShares 2x Daily VIX Short Term Exchange Traded Note (NYSEArca:TVIX), invariably referred to as the T-Vix (“Tea-Vicks”). The Exchange Traded Note, or ETN, was issued by Credit Suisse (NYSEArca:CS) and designed as a vehicle for trading the volatility of the S&P 500 (^VIX) on a levered basis. In theory, if the VIX rose 10% in a day the TVIX would gain twice that amount.
Over the last two days the TVIX lost over 40% of its value. The implosion of the TVIX casts a light on the murky underbelly of the ETF and ETN industry.
See the full “Breakout” interview below: