Member
Posted 09 February 2017 - 11:33 AM
I've recently started investigating leveraged 3x, 2x, etc., both bull and bear.
I already knew about the slow price decay on these funds but was interested in how they perform on short, sharp price changes on the underlying. While I was investigating SPXS (bear 3X), I noticed that it only appreciated about six points in February of 2016 while the SPX dropped about 300 points?
Can anyone explain this to me?
Thanks in advance,
~D
Edited by dowdeva, 09 February 2017 - 11:33 AM.
Member
Posted 09 February 2017 - 12:26 PM
While I was investigating SPXS (bear 3X), I noticed that it only appreciated about six points in February of 2016 while the SPX dropped about 300 points?
Can anyone explain this to me?
Leveraged and inverse ETFs that are offered by Direxion 3X reset daily. This means that Direxion 3X leveraged, inverse ETFS achieve their performance only a daily basis. Holding a Direxion 3X ETF for a period of longer than one day will result in the ETF deviating from the index that it seeks to track. As the Direxion 3X ETF’s prospectus warn, after periods of one day returns may no longer be correlated to the index. The longer the Direxion 3X ETF is held, the larger the deviation.
In other words, stay away.
Fib
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Posted 09 February 2017 - 12:43 PM
Yes. The SPX didn't fall 300 points.
1/4/16 SPX 2012.66 SPXS 17.64
2/11/16 SPX 1829.08 SPXS 22.66
S&P lost 183.58 points or 9.1%, SPXS gained 28.5%.
And your problem is?
Member
Posted 09 February 2017 - 02:31 PM
While I was investigating SPXS (bear 3X), I noticed that it only appreciated about six points in February of 2016 while the SPX dropped about 300 points?
Can anyone explain this to me?
Leveraged and inverse ETFs that are offered by Direxion 3X reset daily. This means that Direxion 3X leveraged, inverse ETFS achieve their performance only a daily basis. Holding a Direxion 3X ETF for a period of longer than one day will result in the ETF deviating from the index that it seeks to track. As the Direxion 3X ETF’s prospectus warn, after periods of one day returns may no longer be correlated to the index. The longer the Direxion 3X ETF is held, the larger the deviation.
In other words, stay away.
Fib
Fib, thanks so much for your illuminating reply, as usual. Hope you are doing well.
Member
Posted 09 February 2017 - 02:31 PM
Yes. The SPX didn't fall 300 points.
1/4/16 SPX 2012.66 SPXS 17.64
2/11/16 SPX 1829.08 SPXS 22.66
S&P lost 183.58 points or 9.1%, SPXS gained 28.5%.
And your problem is?
Libertas,
Thanks for clarifying that. However, I had thought that it tracked the SPX inversely dollar for dollar, and not as a %
~D
Edited by dowdeva, 09 February 2017 - 02:34 PM.
Member
Member
Posted 21 February 2017 - 05:27 AM
It depends. General advice is to stay out of long term positions. But it doesn't have to be a bad trade per see. Just look at TQQQ which is up ~1500% percent since the bear market bottom in 2009. But I expect it to underperform an 300% leveraged NQ futures position during the same time period (?).
Edited by bln, 21 February 2017 - 05:27 AM.
