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February 9, 2018 | Just in the Nick of Time: Fidelity Bans Short Volatility Funds

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Retail investors can no longer trade short volatility funds at Fidelity.

“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 ZIV are also barred. 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.

Mike “Mish” Shedlock

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February 9th, 2018

Posted In: Mish Talk

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