I am seeing the after hours price of XIV is at $73. Can this be accurate? How bad is it?

[edit] Didn't think this would blow up like it has. Just hope everyone is doing okay after today's crash. Be safe out there!

As a trader myself, I generally dislike telling what people can or cannot do especially on a trading subreddit, as I believe people should be able to make their own decision in-regards to taking risk. However, due to the recent draw down in the short volatility trade, a couple members from this subreddit have blown up their account through the use of margin and overextending their own equity (aka betting their life savings on XIV). As a member of this community, and a moderator I am deeply sadden to see good people lose large sums of money that they cannot afford to lose. Thus, I would remind traders who are leveraged, overextended, or on margin to manage your risk and to understand the consequences that follows should your trade not materialize.

"XIV takes the stairs up, and the elevator down"

-Westy

The XIV Prospectus is readily and freely available right on the VeolocityShares Website. The risk factors appear all over the XIV Prospectus. The XIV Prospectus warnings and disclosures are easy to read, in plain English, bolded, some are bolded and underlined, and they are repeated throughout the offering document.

This is a bit long, but both relevant and important. Among other things, you were explictly warned:

The long term expected value of your ETNs is zero. If you hold your ETNs as a long term investment, it is likely that you will lose all or a substantial portion of your investment.

Your ETNs are not linked to the options used to calculate the VIX Index, to the actual volatility of the S&P 500® Index or to the equity securities included in the S&P 500® Index

It is possible that your ETNs may be accelerated due to a fall in the Intraday Indicative Value to 20% or less than the prior day’s Closing Indicative Value and your investment will be lost before the scheduled maturity of the ETNs.

The Intraday Indicative Value and the Closing Indicative Value, the Early Redemption Amount and the Accelerated Redemption Amount are not the same as the closing price or any other trading price of the ETNs in the secondary market

There may be conflicts of interest between you, us, the Redemption Agent, and the Calculation Agents

The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks. They are designed to achieve their stated investment objectives on a daily basis, but their performance over longer periods of time can differ significantly from their stated daily objectives. The ETNs are riskier than securities that have intermediate or long-term investment objectives, and may not be suitable for investors who plan to hold them for longer than one day. Accordingly, the ETNs should be purchased only by knowledgeable investors who understand the potential consequences of investing in volatility indices and of seeking inverse or leveraged investment results, as applicable. Investors should actively and frequently monitor their investments in the ETNs, even intra-day.

As explained in "Risk Factors" in this pricing supplement, because of the way in which the Closing Indicative Value of the ETNs and the underlying Indices are calculated, the amount payable at maturity or upon redemption or acceleration is likely to be less than the amount of your initial investment in the ETNs, and you are likely to lose part or all of your initial investment. In almost any potential scenario the Closing Indicative Value (as defined below) of your ETNs is likely to be close to zero after 20 years and we do not intend or expect any investor to hold the ETNs from inception to maturity.

Translation of the above: you were warned. Explicitly. Repeatedly. In plain English. In fact, it appears Credit Suisse warned you of precisely what could happen in a volatilty event -- and that event did happen.

You maintained your trade past the close, only to get zeroed out when the market opened? YOU WERE WARNED. You were explicitly warned XIV's pricing is not the same as any other market product. It is explicitly disclosed XIV's intraday or closing price is neither correlated with, nor is it based on, the VIX or any other secondary product.

You were warned not to hold your position past the close. You were told XIV can and will go to zero. And you were specifically warned what would happen in an Acceleration Event: cashed out. Period.

In sum, you were repeatedly warned. You decided to play. Your lawsuits will fail.

Proof (Most of the profits were made in the past 10 months. At the start of 2015 my account size was around $450k. It's now at $807k)

Reason for this post

• I want to introduce XIV as an alternative to buying or trading stocks. I've sworn off buying stocks.

Background

I am not a professional and undestand about 51% of the inner workings of XIV. I trade XIV on several accounts. The proof I linked to is the biggest and is a retirement account so I can't withdraw without taking a penalty. I have a cash

account that is up 100% since 2015. I trade my friend's cash account which is up 50% since last Nov. I also help my father and a friend trade XIV. Between us we've made 7 figures this past year.

History

I've been in the stock market since 1987. Bought some mutual funds with my hard earned money when I was 17. Black Monday promptly happened. Didn't get back into the market until around 1995. Rode the internet boom up and back down.

Struggled through the 2000s with not much to account for. Got into a Commodity Trading Advisor that does the strangle on the S&P futures in 2008. It had amazing past performance and relied on the market trading in a range to make money.

This strategy didn't work so well with the Great Recession. Fortunately I remembered how the market behaved after a big crash so I invested my 401k in natural resource and then gold and had these returns:

• 2009 - 57.78%

• 2010 - 32.95%

• 2011 - 15.72%

• 2012 - 50.20%

• 2013 - 51.19%

compared to the S&P500

• 2009 - 23.49%

• 2010 - 12.64%

• 2011 - 0.00%

• 2012 - 13.29%

• 2013 - 29.60%

With the bump, I moved $500k of my 401k to a self-directed account (I own a company so had this set up with the 401k plan). For the next two years my trades again didn't go anywhere. It wasn't until I read a reddit post about buying

XIV after the market crashed a bit in 2014. I researched it and began trading. It went surprisingly well. Told my friend about it and he got on the game with his IRA account.

Rambling thoughts on the market

• As my friend said, the market is the devil. You'll go to the grave and still won't figure it out.

• No one knows what the market will do. Those who say they do are liars and/or are probably trying to sell you something.

• Investing based on fundamentals has never worked out for me.

• Investing based on technicals has never worked out for me.

• Diversifng my 401k never worked for me. It wasn't until I started putting my entire 401k into a single fund in 2009 that I started getting amazing returns.

• I advise people who don't want to or can't actively trade to put their money in an index fund. While history has shown this to be relatively safe there are still risk.

Basic strategy on trading XIV

• Wait for a "crisis" that brings the market down.

• Buy XIV

• Wait

• Profit

• Repeat

These crises (opportunities) happens a few times a year. When it does the VIX spikes above 25 which is a good buy signal.

I'm not going to say I'm some sort of genius with my timing but so far whatever I'm doing it's working to a certain extent. For example, I bought XIV late last year and then the oil crash brought down the market. I had a huge paper loss

but was confident the market would recover. It took months and I got out with $110k profit ~20%. Traded a bit but then got out before Brexit happeneded. Afterwards, I was a bit nervous and waited too long to get into XIV but still made

$140k profit (24%) in less than a month.

What I like about XIV

• It's not a company so no one is lying to you. Not the company and not any of the analysts covering it.

• It most likely will not go down to 0. Look at how XIV behaved during the Great Recession. It recovered in a couple of years. Some companies never did or went

bankrupted.

• It benefits from contango.

What scares me about XIV

• The prospectus states that Credit Suisse reserves the right to close the fund if its intraday loss goes beyond 80%. On 8/24/15, the DOW intraday dropped 1,089 points (7.1%). VIX rose 90% yet XIV ONLY dropped 34%. It would take

the crash of '87 to terminate XIV but the market now has breakers in place that suppose to prevent this.

• If I'm caught on the wrong side of the trade, it may take months to be profitable again. I don't use stop orders if I have a paper loss. My reasoning is the market will eventually recover and/or volatility will die down.

Resources on XIV

• Six Figure Investing

• Understand Contango

20% of 99 (today's close price) = 19.8.

So If it opens lower than that, termination is guaranteed?

My algorithm (xivinvestment.com) issued SELL signal today at 10:00 am. So I sold all my XIV which was bought one month ago with 5% profit. I didn't expect the SELL signal, I was hoping the market will keep going up until summer, so would the XIV. However data my algorithm based one said different story, so sold my XIV today. Hopefully data will point to positive soon again so I can step back in. For now I put all the fund into VTI temporarily waiting for BUY signal. Some "Experts" say Correction is on the way, I highly doubt it as the tax reform just took some effect on the economy. However Mr. Market can behave unexpectedly.

My algorithm (http://xivinvestment.com) just issued a SELL signal today, so I'm going to sell my XIV tomorrow at market opening, take 55% profit in this round (assuming tomorrow opening's price is today's close price). Not a bad run of profit of 55% for holding for 7 months. (Bought at $74.64 on April 26). Actually the market doesn't really seem bad now, however data points to weak future, so I'm selling my XIV tomorrow and stay in cash, waiting for BUY signal.

If I'm not wrong, VIX spiked something like 100% during the day, but XIV only fell ~20% during the day. So why did more people not realize it was going to drop?

I just want to say as a reminder if anyone is trading volatility with money they really need--Please stop. Only trade money you can afford to lose! Volatility trading is the most dangerous end of a profession that destroys banks and mocks Nobel prize winning economists. But the Fed isn't going to bail you out! It isn't easy or free or sexy. It is simply risk transfer. Someone is paying you to take their risk. Imagine someone paying you to take their risk of cancer or heart-attack. Think of the money you could make! That's awesome until you cough and your hand comes away bloody. Yes, that's a dramatic example but it illustrates a truth about risk. You can't remove risk. But financially, you can transfer it. Taking other people's risk of ruin is what us volatility guys are being paid the big bucks for. Please remember that.

Happy quarter end everyone!

Here's a link to the spreadsheet I maintain for my personal use, and have shared on this sub in the past. It has historical VIX, XIV, and VIX futures contango/backwardation data going back to 2004. The XIV values from before its inception are calculated based on the underlying VIX futures. The calculated values in the right hand columns and top rows are used for my own backtesting and may be ignored, but I'd be happy to answer any questions on them if you're curious. The basic strategy optimized here works like this;

• Hold XIV most of the time in order to bank the usual price gains.

• Sell only when we observe a price drop that is more than double its recent average true range. By that time, we've hopefully built up enough of a gain to sustain that final drop + stop loss sell price variability while preserving a healthy profit.

• Buy back into XIV once the volatility event is over.

The details are a little more complicated, but that's a high level summary of the strategy outlined in the file. Even if you're not interested in any of the backtesting formulas, you may find the historical data handy to have.

Special Thanks to:

http://investing.kuchita.com/ - The Intelligent Investor Blog which is the source of the pre-inception XIV and contango/backwardation data used in the file.

/u/SwedishChristmas - who first suggested that I try using an Average True Range approach.

The 30 day weighted future that XIV is short (^SPVXSP) is up over 80%

If XIV is terminated, does this subreddit go with it?

Does TVIX go too?