iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
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TRAGEDY IN THE AFTER-HOURS: A WALL STREET TALE OF $XIV (part 2)

Continued from part 1

Tom got a nice bottle of Chardonnay from the mid-town Manhattan liquor store and grabbed an Uber to meet Melinda and her friends for an early dinner, scheduled for 5pm. The market was due to close in about an hour and he felt good about his XIV positions, especially for Grandma. The money he’d make for her might offer a guilt free trip to Italy, a place she always wanted to visit.

Back at the office Chris had been manning the phone all day, shoveling client assets into XIV. It became infectious. Almost everyone at the firm bought some, everyone except Stanley.

“Hi honey, sorry I’m a bit late — had to make a few trades before I left. My Grandmother gave me a rather large order and I wanted to get her a good fill.”

“My beautiful husband to be, always trying to get the best fills. Did you buy us any of this hot stock?,” cried out Melinda while drinking from a large goblet filled with white wine.

“You bet”, and Tom held out a glass and offered cheers.

Markets closed and XIV started to move rapidly to the downside. It closed above $100 and was now printing $85. Tom started to get text messages from the boys back at the firm. Mary texted too. Apparently one of Tom’s clients was gravely concerned about the price movement and wanted to know if there was any news.

“This can’t be. What in…”

“What’s the matter Tom? Something went wrong?”, asked Melinda

Tom looked at his phone and then Melinda with the pallor of a ghost and said “as a matter of fact, something is wrong.”

The steaks arrived and Tom’s guests were chatting away with Melinda, who kept one eye on them and another on Tom.

“Mary, hi this is Tom. What’s going on with XIV? Why is it tanking?”

“No idea Tom. Your Grandmother called and said she told all of her friends at the bingo hall to buy it and she hoped to speak to you tomorrow morning.”

“Great. Hey, I’m at dinner now and really can’t talk. Where is the stock now?”

Mary looked at her computer and said to Tom in a deadpan voice “Sixty-Five.”

“SIXY FIVE! How the hell!”

“Do me a favor, Mary, buy another 20,000 shares of it for my personal account now. I’m sure it’ll bounce tomorrow. This has to be some sort of fat finger flash crash — right?”

Mary replied “20,000 shares. Got it”, and hung up.

The more Tom ate the more XIV crashed lower. By the time his dinner was complete, XIV closed after-hours trading down 80% to $21.

“What the fuck is a termination clause?”, asked Melinda

“I have no idea honey. They’re saying the fucking thing is going to zero. ZERO!  They’re saying a termination clause had been triggered and that it was all in the prospectus,” cried Tom. “There’s nothing anyone can do about it. That’s it,” said Tom desperately.

Melinda enraged by the debacle, screamed out “WHO SAID THIS? Who said it was in the prospectus? We will kill them before they think they can take all of our money and piss away with it.”

“Cramer, hun. Jim Cramer said people were morons for not reading it. He said it was all there in black and white.”

“This isn’t Charlie and the Chocolate factory, Tom. Stocks just don’t close at $100 and open at zero. Cramer can go fuck himself.”

The night cast its shadow over NYC and Melinda and Tom were so incensed by what had happened — they just sat at their kitchen table contemplating the ramifications of Tom’s wayward actions when the phone rang out.

“Who the hell is calling us at this time of night?” yelled out Melinda.

“It’s probably a telemarketer — I’ll get it,” said Tom.

Tom picked up the phone and he heard someone on the other end breathing rather heavily. He could also hear the sound of chewing and the sound of a 4 day old beard brushing up against the receiver of the phone.

“Who the hell is this? I don’t have time for games,” cried Tom.

“I told you.”

“What. Who is this?”

“That’s what happens when you get hooked. I told you not to get involved with that.”

Alerted by the language used, Tom said “is this Stanley?”

“This is what happens when you get that exuberance.”

“How did you get my number, Stanley. What the hell is going on here?”

Stanley just chewed on his cigar, rested the phone between his shoulder and his head and began reading from page 128 of the XIV prospectus.

“If we accelerate the ETNs, you will only receive the Closing Indicative Value and will not receive any other compensation or amount for the loss of the investment opportunity of holding the ETNs; or JHD exercises their right to cause an early acceleration due to the termination of our agreement with them under certain circumstances. ”

“Shut up Stanley. You, you shut your God damned filthy cigar filled mouth.”

“Who the fuck is that Tom?” cried Melinda with a cigarette in one hand, bottle of wine in another.

“I think it’s the devil hun. It’s Stanley, but I think he’s the devil.”

Stanley kept going, reading directly from the XIV script, concluding:

The long term expected value of your ETNs is zero.”

Stanley turned the page, licking a finger to grab some traction, “If you hold your ETNs as a long-term investment, it is likely you will lose all or a substantial portion of your investment.”

“Stop it Stanley, for the love of God. Stop it,” cried Tom.

In the background Melinda could be heard talking to herself “what a marriage this is going to be. I married a gambler, a degenerate gambler who just lost our honeymoon money.”

Then panic struck Tom, remembering he had given Mary an order to buy $1.3 million worth of XIV in the after-hours at $65. His entire account was worth less than that. This trade was placed on margin.

“Oh no. God no,” mumbled Tom, pulling at his hair.

Tom dropped the phone and Stanley began to laugh maniacally on the other end. Melinda was drinking directly from the bottle and Tom was pacing back and forth trying to subdue his panic attack, when the doorbell rang.

Melinda put down the bottle and extinguished her cigarette into a crystal ashtray — and said to Tom “who is coming to our apartment at 9 o’clock at night?”

Tom just stood there, dumfounded, silent.

Melinda opened the door and greeted her surprise visitor and yelled out to Tom “Tom honey, come over here your Grandmother just paid us a visit.”

“How nice of you to come, Grandma. I love your dress. Tom and I were just talking about you.”

Fin.

Happy Halloween!

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12 comments

  1. mrcharlie

    TLT all over again Fly???

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  2. bidens hands

    *two hands clapping furiously*

    MOAR!

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    • numbersgame

      I’m confused, why would Biden’s hands clap at this story? Does the grandmother remind him of Warren?

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  3. numbersgame

    Ok, so I like this line: “Tom and I were just talking about you.”

    Now back to our irregularly scheduled football game.

    “Bulls are leading, Bears have the ball. Their veteran QB TLT is on hot streak, first a 20yd pass to their star wideout GLD, then another to their Japanese tight-endo.(he’s lesser known, but a key player). Even their young irratic RB VIX just broke a 10yd run. Yet, the Bulls look confidant, even complacent: they’ve seen big moves before, but always seem to hold the lead.”

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  4. gsofield

    My guess is Melinda liquidates Tom in Act III when she discovers the 1.3mil has vaporized.

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  5. tradercaddy

    I thought your friend Howard would have known better. This XIV is like groundhog day.

    From Stocktwits: howardlindzon
    Plus
    10/9/19, 01:30 PM
    Sickening that Credit Suisse walks away unscathed by $XIV … totally humbled me but I will overcome

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  6. tradercaddy

    I guess it could have been worse. If somebody bought TVIX in Sept. 2011, it would have cost some 285,000,000 a share and it is now worth $9.00 a share.
    Pity the person who bought it at that time and then became a castaway on an island somewhere and then comes back today and sees what happened. Sounds like a movie.

    https://www.barchart.com/stocks/quotes/TVIX

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    • rigged game

      BUY TVIX now at 8.75. You will get a fast DOUBLE.

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      • numbersgame

        No, you won’t,.

        If you were to currently hold TVIX for 1 week, VIX would have to go up more than 10% for you to even break even. If you were to hold it for a month, VIX would have to go up over 20%.

        Of course, any single day, the VIX could spike due to an unexpected event.

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  7. natehois

    Bravo, good sir

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  8. jbandy

    I didn’t know you were into writing children’s books…kudos to you! 😀

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