Don't Look Now, TVIX Premium Soaring Again
It probably hasn't been safe to swim in the waters of the VelocityShares Daily 2x VIX Short-Term ETN (NYSE: TVIX), arguably one of the most controversial exchange-traded products, for a while, maybe ever. Certainly, TVIX has proven to be hazardous since late February when issuance of new shares in the ETN was halted by Credit Suisse (NYSE: CS), TVIX's issuer.
That scenario led to TVIX trading an a highly elevated premium to its closing indicative value and it's now fair to say most investors know what the result of that situation was.
So it's curious to note that following all the controversy regarding TVIX and other ETFs and ETNs trading at lofty levels to their indicative values that TVIX's premium is creeping back up again.
Actually, "creeping" may understate the situation. The VelocityShares Web site shows a closing indicative value of $6.56 for TVIX, but as of this writing, the ETN is trading at $7.97, good for a 21.5% premium.
That's a fairly significant jump in a short amount of time. At the close of markets Monday, TVIX's premium to its indicative value was 11.4% according to Bill Luby. As Luby noted it's possible Credit Suisse may be pondering another suspension of TVIX share issuance. Along those lines, it should be noted that the Swiss bank did say on March 22, the day TVIX imploded, that it would issue new shares of the ETN on a limited basis.
Bottom line: It's still not safe to messing with TVIX. And for those that are curious, Credit Suisse's U.S.-listed shares are down almost 7% since March 22.
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