Money Stuff: Index Firm Forgot to Update XIV

XIV

Credit Suisse Group AG used to have a product called XIV, the VelocityShares Daily Inverse VIX Short-Term ETN, an exchange-traded note that you could buy to bet against volatility. Loosely speaking, XIV gave you the daily inverse of VIX, the CBOE Volatility Index: If the VIX went up by 5% in a day, you lost 5% of your money; if it went down by 10% in a day, you added 10% to your money. One day — Monday, Feb. 5, 2018 — the VIX went up by 115.6%, from 17.3 the previous Friday to 37.3 that day.[1] So XIV investors lost all their money that day, and XIV doesn’t exist anymore. Fine!? 

But that was an oversimplified description of how XIV works. Actually it tracked, not the actual VIX, but changes in an index of near-term futures contracts on the VIX. The reason for this is that Credit Suisse, the issuer of the exchange-traded note, had to hedge its…