The 'double-VIX' ETF is the most actively traded stock

ETrade Bans Margin Trading on Volatility ETF as Swings Increase

The possibility of more such trades unwinding adds a further layer of uncertainty ahead of Tuesday's session on the S&P500, as Asian markets continue to suffer heavy falls in afternoon trade. When the index product plummeted in value after hours last night, CS stood to make a potential net loss of $530m. The last day of trading for XIV is expected to be Feb 20.

Too big to ignore, it's an asset class in its own right, with the might to push around the broader market.

"It doesn't surprise me that it's become so big". "It's impossible to eliminate all volatility, no matter how well the portfolio is constructed".

Those funds are inversely linked to the VIX, a gauge of turbulence in the market.

Investors have an obscure way to place bets that the market will stay calm.

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Several risky funds that reward investors when the markets are quiet imploded in the global market rout. Theoretically, if stocks begin to trade wildly, they may scale back their footprint.

The 14-day ADX for S&P 500 Dynamic VIX ETN Ipath (XVZ) is now sitting at 27.71.

Two days after a sudden spike in volatility sparked a stock-market crash, market participants are left to ponder the wreckage of the sell-off and the mysterious dynamics that caused it. As funds' assets swelled, so too had their power to move the underlying VIX futures markets, he suggests.

AUM for them is about $250 billion, according to SocGen data through 2017. The Dow plunged by a record 1,175 points on Monday.

For the Dow, the fall at one point of almost 1,600 points was the biggest intraday point loss in Wall Street history. In the aftermath of an unexpected volatility explosion, Credit Suisse is moving to terminate the VelocityShares Daily Inverse VIX Short-Term ETN (NYSEArca: XIV).

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"Investors will receive a cash payment per exchange-traded note in an amount equal to the closing indicative value of XIV on the accelerated valuation date", said Credit Suisse, which won't sell new XIV notes after the buyback.

"That was a very crowded trade, full of people who didn't understand the products", said Sal Arnuk, co-founder of Themis Trading and co-author of the book "Broken Markets". And for more than a year, they couldn't lose.

The strategy requires constant trading in VIX futures to keep on track, but it's not a strategy that works long-term. One of the most popular time frames using RSI is the 14-day.

Those strategies of selling volatility and buying risky assets have proved to be tremendously profitable in recent years.

Over-the-counter options trading in USA equities reached about $2.7 trillion in notional amounts outstanding in the first half of past year, according to data from the Bank for International Settlements. Presently, the 14-day ATR for VIX Mid-Term Futures ETN Ipath (VXZ) is spotted at 0.74.

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Friday's rise in volatility put investors on edge, but this week's surge brought the roof crashing down on such trades. The 14-day RSI is presently standing at 13.97, the 7-day sits at 8.63, and the 3-day is resting at 3.52.

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