Just In The Nick Of Time: Fidelity Bans Short Volatility Funds
Mike (Mish) Shedlock | Feb 11, 2018 03:45AM ET
Retail investors can no longer trade short volatility funds at Fidelity.
The Financial Times reports Fidelity Bans Retail Investors from Trading Short Volatility .
“We have blocked opening trades [in SVXY],” said a Fidelity spokesperson. “You can’t buy them but you can sell them if you own them and we have increased margin requirements on other volatility ETFs to protect customers on outsized risk in this market environment.”
Short volatility funds including VelocityShares Daily Inverse VIX Medium Term (NASDAQ:ZIV) are also barred. VelocityShares Daily Inverse VIX Short Term linked To SP 500 VIX Short Fut Exp 4 Dec 2030 (NASDAQ:XIV) closed its doors following massive investor losses.
Just as it finally makes some bit of sense to consider shorting volatility, the brokerages ban the practice.
Here's the kicker. Fidelity will open volatility trading in the “foreseeable future provided the market co-operates.”
In other words, if volatility declines you can get back in.
What a hoot.
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