XIV Es Muerte?

What happened to the Inverse VIX ETN?

There's fluid situation happening in the after hours with the VelocityShares Daily Inverse VIX Short Term ETN (XIV). Here's a Bloomber chart of VIX tweeted out by @schuldensuehner showing the VIX getting close to 40 in the sell off today.

It may have terminated XIV, the adverse move in VIX was enough in one day in percentage terms to terminate XIV but I am not sure that they are required to terminate it. The next picture is a screen shot from Google Finance showing the close and the after hours trading.

I've seen quite a few tweets saying it is terminating which makes sense but I don't know it as a fact but it's not important for this post. I regularly write about how a simple asset allocation combined with an adequate savings rate can get the job done in terms of building long term wealth. There is nothing simple about the VIX Index or any of the exchange traded product that track it.

There is an allure to having VIX exposure. It certainly is sophisticated and the potential size of the moves appeal to the sense of greed but this type of exposure is very unnecessary. There are complications on at least two levels; understand the underlying and then understanding the products themselves. The inverse product get a tailwind from the contango and the long products face a headwind from the contango. The ETPs of course don't track the spot, they track futures and most of the time futures trade differently than the spot. There's more.

You don't need VIX exposure to wind up with a healthy account balance when you retire. In an almost identical context you don't need Bitcoin exposure to wind up with a healthy account balance when you retire.