Now even if you want to go long, the ultrashort fund is more liquid (the bid-ask spreads are smaller) so you just short it instead of going long the ultralong ETF. This behavior creates even more liquidity for the short ETF-thus creating a virtuous cycle of steadily rising volume.
That's an interesting observation.
I wonder how many short shares are shorted?
Of course those of us of who trade in IRA's can't short anything, so the SDS and QID are wonderful and QLD and SSO are useful even with larger spreads.
Edited by Rogerdodger, 12 August 2007 - 12:42 AM.