One of the most popular volatility-based products saw trading halted multiple times Tuesday due to (wait for it)… excessive volatility. Extra ironically, it’s been one of the least volatile of the past two weeks.
The halts in the Barclays’ iPath S&P 500 Short-Term Volatility (VXX) were implemented, per exchange rules, VXX jumped 20%; automatically triggering a 10-minute halt, it then rose another 20%, triggering the second halt. When VXX reopened, it climbed to $41 (up some 52%) on the day. It then dropped 20%, triggering a third halt.
So what exactly caused the dislocation?
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