NEW YORK (TheStreet) -- The VelocityShares Daily 2X VIX Short-Term Futures ETN's (TVIX) recent meltdown has helped show the daunting challenges that come with handling premium-laden exchange-traded products. Unfortunately, despite watching this ETN's dramatic downturn, there still seems to be disturbing interest in TVIX and other disconnected instruments.
Over the course of its spectacular selloff, we have watched as the premium underlying TVIX has fallen considerably. However, it is not completely out of the woods. During late March, the fund's premium was hovering around 5%. More recently, though, it was regaining some ground, breaking back through 10%.
Interestingly, in the face of this persistent divergence (from the performance of the index it is supposed to track) and the instrument's gut-wrenching action, investors still appear willing to give TVIX a shot. On Tuesday, more than 10 million shares changed hands.
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