To the oil speculating cunts, I hope you enjoy knowing you will never get your money back and I hope you all jump off a building
I'm about to get a bunch back when I file my taxes.
>Thats not how it works. Plenty of -10% days inbetween
No, that's exactly how it works, sperg.
If I bought at $70, it doesn't matter one bit what the stock did in getting from there to $480. If it was $480 the day before, opens at $210, and I sell; I'll make 300% despite the ticker reading a +50% loss for the day.
Reset is just a fancy term for the fact that the returns and losses compound when you hold longer than a day in a leveraged fund. Foolish is suggesting that selling something for 7x what it was bought for wouldn't net a profit.
The original point of contention was that one wouldn't have made a profit buying DWTI at $70 and selling at $480 because of 10% settings in the interim, which is patently false.
No, you idiot. It literally resets. The chart you are looking at is adjusted to account for dozens of resets that you arent seeing. It could close at $100 one day and reopen at $10 to increase liquidity. $10 is now the new $100. It's not a split, you dont get more shares, you just lose $90 overnight. But, hey, don't believe me. Go find out for yourself, newfriend.
That's not true at all you retard.
They roll over options/futures contracts, the ETF itself doesn't roll over to a completely different fucking price.
And yes ETFs can in fact perform a reverse split.
Holy shit the financial illiteracy on this site sometimes is baffling.
Both of you need to read this before continuing your shitposting:
>Most leveraged and inverse ETFs and ETNs currently reset on a daily or monthly basis and are therefore designed to deliver their stated returns for the reset period only (i.e., one day or month)
If it says "dont hold this ETN overnight," then don't fucking do it. This isnt hard to figure out
They're reset by their asset managers rolling over contracts to stay in line with a 3x daily performance.
I'm not saying a 3x daily etf tracks with the underlying asset over a long period of time.
Holy fuck you're retarded. It doesn't just magically go down 90%. There has to be volatility.
And it doesn't matter. However the fund performed is how it performed. If it went up and down a bunch of times then yes, the fund would go down even if at the end the net result of the underlying assets went in the direction of the leveraged ETF. But based on the chart of DWTI, if you bought at 70, and sold at 480, you fucking made 6.8x your money.
The ORIGINAL point of contention was that the retard OP probably didn't buy and hold, but traded all day and lost money.
The price of any stock or ETF is determined by supply and demand. Period. For a leveraged ETF, the leverage against the NAV (period) is reset at certain intervals. There is nothing that forces a stock price has to match the value of the underlying fund. If it doesn't match then you have a price drift then you would pay a premium or discount.
Cont. There is no danger to holding leveraged ETFs themselves. The danger is people relying on the price of the leveraged ETF to move in the complete opposite/same direction of another index. It's better to analyze a leveraged ETF alone than to use another index as your calculation.
Except literally nobody has said that. I said not to in my original post. You're the anon that said buying at $70 and selling at $480 wouldn't net a profit. This was due to an egregious misunderstanding of how any derivative product works.
You then went on to demonstrate a poor understanding of the reset concept. Reset, as stated earlier, is basically just the ETF's "goal period." If it's a double-inverse with a single day reset, it should track the underlying product's performance for the day neigh perfectly. If the reset is a week, it should do the same. What reset doesn't mean, however, is that they literally reset the price of the ETF at the end of that period. Know why? Because if it was going for $150 at 3:58pm, I would short it with every fucking dollar at my disposal (And then some on margin) and simply cover at the open for an easy 33%. It would be a layup. All reset means is, "Hey dipshit, this only mimics the tracked commodity/index for the day/week/month. If you hold it longer, they won't match up."