Can someone explain to me VIX XIV

[Anonymous No.7517479]

Like SQQQ. 3x market loss and you gain. How do they make the gains? Just shorting? Where does the $ come from?

[Anonymous No.7517738]

>>7517479
> Where does the $ come from?

[Anonymous No.7517848]

Here's a brief rundown. Basically vix tracks the spread between options on the S and P 500. You can't buy VIX because it's not an actual portfolio and it changes every 15 seconds to reflect a price index. But what you can do is bet on the price of VIX at a later date, essentially whether the market will get more volatile are not. These bets occur on the VIX futures market, where the settlement price of the contracts is based on the VIX index price on expiration. XIV is inverse VIX futures, which means it maintains a -1 holdings to VIX longs, doing essentially the opposite, readjusting it's portfolio every day at close instead of every 15 seconds. Since Volatility had been trending down, and usually does in a healthy market, XIV was gaining very quickly. Now that volatility entered the market though, XIV shit the bed largely due to the concentration of funds. Far more money has been going into XIV then Vix in the past 6 years because VIX long futures have consistently shit the bed, compared to XIV which has made returns 3x the market average at least. So when XIV had to cover there short position, they had to buy up the entire float essentially of an illiquid VIX futures market. This in turn created arbitrage opportunities between S and P futures, which led to an increase in VIX spot price perpetuating an increase in VIX futures, which increased the need for XIV to liquidate.

[Anonymous No.7517871]

>>7517479
Idk what they do but I always hold some of both just to be safe

[Anonymous No.7517934]

>>7517871