The ProShares Short Volatility ETF Lives To Fight Another Day

2 red-hot investment products just blew up, erasing almost $3 billion in minutes

It measures expectation of volatility. This sounds a lot like good old fashion human gamesmanship. And to add insult to injury, the economic fundamentals this week are just not all that different from the fundamentals of the prior week, after considering Friday's wage inflation and Federal Reserve rate hike fears.

Monday's slump in the US stock market may have been painful for those betting against volatility in prices, but traders who took opposite positions hoping to gain from a sharp move are likely to laugh all the way to their banks.

The unprecedented surge in short-term volatility in the last couple of days led to a free-fall in products that bet against volatility on the view that volatility would stay low. In October, Wells Fargo (big surprise there) was fined $3.4 million by Wall Street regulator Finra for pushing volatility-linked investments. If it was simple, everyone would understand it.

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ET/PT on OWN: Oprah Winfrey Network and will be available via podcast at Oprah's Super Soul Conversations . Oprah at the Apollo will air on February 27 at 10 p.m.

In 2016, the bank took its leveraged oil-tracking notes off of exchanges without offering all of its investors a way to redeem them, forcing some to trade "over-the-counter", where there was no guarantee of recouping their full investment. We also have outlined some strategic calls from analysts and advisories for those investors who are interested in looking through the mess to the other side. The RSI is computed based on the speed and direction of a stock's price movement. So Wall Street came up with VIX funds that just bet on changes in short-term volatility and rebalance those bets daily to give investors as close to that 116 percent change in the value as possible.

Cerebellum GP LLC purchased a new stake in iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) in the 4th quarter, according to its most recent filing with the Securities & Exchange Commission. As a result, the lower and upper re-opening auction collars will be $10.84 and $11.98 respectively. Shares in the Cboe itself, which has reaped licensing fees from the oodles of products tied to its flagship index, also tumbled a record 17 percent on Tuesday. The CBOE has a video explaining some of Monday's VIX trading activity.

The VelocityShares refused to comment on the Monday's move. Their take was that the market computers functioned normally from the high-speed trading firm. That CNBC video can be seen here.

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"If an Acceleration Event occurs at any time with respect to any series of the ETNs, Credit Suisse has the right to accelerate all of the outstanding ETNs of such series". Thus, more volatility equals higher options prices, and the VIX will rise.

Credit Suisse says it will terminate the second-largest publicly traded product betting on future swings in the S&P 500 after its value plunged during the global market rout. Sheaff Brock Investment Advisors LLC acquired a new stake in Credit Suisse AG - VelocityShares Daily Inverse VIX Short Term ETN in the third quarter valued at $262,000. However, ForexLive went ahead and calculated that Credit Suisse may have incurred a more than $500 million loss.

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