GVZ

[cwelsh]

Well, I don't know if anyone else has noticed this but GVZ is no longer trading -- well its trading, but you can't buy or sell on it.

 

I was long a GVZ straddle.  I am quite pissed off as it was automatically liquidated before market opening today.  Yes I still made a profit (15%), but at the current prices, I would have returned well north of 500%. 

 

For the second time in 3 years, I've now been burned by not reading a full prospectus.

 

GVZ's states that, in the event of large early market moves, the MM has the option to CLOSE ALL POSITIONS pre-market, at a "reasonable price given the close of the prior day."

 

In other words, the deck is REALLY stacked against you.

 

I'm done with this one.

[Stephen]

Brutal........

[jfouche]

Ouch. What was the other time?

[indiana*josh]

That's interesting, because I'm long a put that I purchased just before Friday close, but it's not been liquidated.  At this point, I'd like to sell for it for whatever I could get for it, but nobody is buying.  Are you saying that nobody is buying because nobody is allowed to buy (as opposed to just because nobody wants my worthless put)?

 

Needless to say, I was banking on a gold rally after Friday's correction.  I wasn't expecting mass carnage.

[Marco]

Well, I don't know if anyone else has noticed this but GVZ is no longer trading -- well its trading, but you can't buy or sell on it.

 

I was long a GVZ straddle.  I am quite pissed off as it was automatically liquidated before market opening today.  Yes I still made a profit (15%), but at the current prices, I would have returned well north of 500%. 

 

For the second time in 3 years, I've now been burned by not reading a full prospectus.

 

GVZ's states that, in the event of large early market moves, the MM has the option to CLOSE ALL POSITIONS pre-market, at a "reasonable price given the close of the prior day."

 

In other words, the deck is REALLY stacked against you.

 

I'm done with this one.

wow didn't know about that small print. Thats outrageous. Do you know of any other product where MM's can close you out?

If you have a spread does that mean they can close out your long and leave you with the short? I mean robbing you of a 500% return is pretty bad but say you had a GVZ Call Spread and they close your long and you are left with the short that sort of thing can kill your account?! Find it hard to believe that they can get away with that.

 

Again are you aware that this can happen in any other product?

Edited April 15, 2013 by Marco

[EricSimpson1]

Whoever came up that rule is a scumbag.  Is there any way to fight it?

[tjlocke99]

Well, I don't know if anyone else has noticed this but GVZ is no longer trading -- well its trading, but you can't buy or sell on it.

 

I was long a GVZ straddle.  I am quite pissed off as it was automatically liquidated before market opening today.  Yes I still made a profit (15%), but at the current prices, I would have returned well north of 500%. 

 

For the second time in 3 years, I've now been burned by not reading a full prospectus.

 

GVZ's states that, in the event of large early market moves, the MM has the option to CLOSE ALL POSITIONS pre-market, at a "reasonable price given the close of the prior day."

 

In other words, the deck is REALLY stacked against you.

 

I'm done with this one.

 

Yeah Chris that is ridiculous.  Should we be extended that right to trade in the pre-market too?

 

Frankly the whole shadow banking cartel is ridiculous.  Profit like crazy and then socialize the losses.  Any chance we could get the fed minutes early too?

[tjlocke99]

Well, I don't know if anyone else has noticed this but GVZ is no longer trading -- well its trading, but you can't buy or sell on it.

 

I was long a GVZ straddle.  I am quite pissed off as it was automatically liquidated before market opening today.  Yes I still made a profit (15%), but at the current prices, I would have returned well north of 500%. 

 

For the second time in 3 years, I've now been burned by not reading a full prospectus.

 

GVZ's states that, in the event of large early market moves, the MM has the option to CLOSE ALL POSITIONS pre-market, at a "reasonable price given the close of the prior day."

 

In other words, the deck is REALLY stacked against you.

 

I'm done with this one.

Chris,

 

Does SPY have a similar loophole in its prospectus?  If so then that could kill the Reel Ken style hedged portfolio strategy.

[cwelsh]

No, Ive read the whole SPY prospectus forward and backward.

 

The one other time was with SLV -- go read pages 8-9, 25 of the SLV prospectus and the CBOE's site

 

essentially in "unusual market conditions" they can "suspend" trading or "readjust" to reflect NAV as the trustee sees fit.

 

This happened to me -- on expiration day, about two years ago, I had a butterfly spread that was WAY in the money (I predicted a move), but when I tried to close the position, I was told trading had been suspended due to unusual market activity (e.g. the price had moved a huge amount). 

 

I had the position on my books for almost a week, it was then "readjusted" almost 10 days later at the then current price, resulting in a small loss.

 

I fought that for several months, and essentially figured out that, sorry, you're screwed. 

 

It had to do with the fact that one of the MM's tried to liquidate several thousand baskets of "shares" for actual sliver, which the custodian did not have the ability to do.  Thus, suspended.

 

This can't really happen with SPY as there is always the ability to liquidate at current market prices,  unlike a real physical delivery of silver from the trust in london. 

 

FYI, as far as I can tell, since the creation of SLV, trading has been temporarily suspended at least three times.

 

As to the question on GVZ, I have no clue why you couldn't sell, or weren't redeemed, or who knows what.