We noted earlier that US equity futures were extending losses after the close, but the real panic action is in the volatility complex.
Putting today’s VIX move in context, this is among the biggest ever…
And it appears Morgan Stanley was right to bet on VIX hitting 30…
But the real action is in the super-crowded short-vol space.
XIV – The Short VIX ETF – after its relentless diagonal move higher as one after another Target manager sold vol for a living… just disintegrated after-hours, down a stunning 50%
And SVXY – Short VIX ETF -is down over 65%…
Remember, last Thursday saw investors pour a record $520 million into an exchange-traded note that gains when VIX drops…
As one veteran trader (who has seen numerous volatility cycles), “I’ve never seen anything like this… this is it” referring to the start of the unwind of the biggest aggregate short volatility position the market have ever known.
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