Fun with ETF leverage

rffrydr · Posted: Thu Dec 11, 2008 9:59 am Post subject: Fun with ETF leverage

Heads they win, tails you loose....and it all adds up:

http://seekingalpha.com/article/104703-explaining-inverse-and-leveraged-etfs

http://www.marketthoughts.com/forum/soar-t11330.html

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rffrydr · Posted: Sat Dec 05, 2009 11:10 pm Post subject:

Interactive is the best "deal" bar none...as long as you can cover your overmargined ass. There is no margin call with them. A machine starts selling your stuff--with, of course, no rhyme nor reason. But, if I lived in Poland, or France for that matter, Interactive would be it...hands down.

Heinz is paying 4%--go for it!
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nodoodahs · Moderator Joined: 06 May 2005 Posts: 2408

I had a little bird write a blog post that mentioned Interactive Brokers as having the friendliest margin requirements. I haven't checked and don't personally care - I use it sparingly enough that I just pay it, not worth the hassle of moving accounts IMO, 'specially when the leveraged ETFs can provide some juice when used with big bites of cash.

Good discussion of the impact of leverage in this thread:
http://www.marketthoughts.com/forum/soar-t11330.html

Don't insult drunken sailors like that.

Emerging and developed markets have been the trend for a while now. It's interesting to see the "home bias" at work in the media. Just the other day I forced myself to watch "Fast Money" all the way through, and ALL of the "hot stocks" they talked about were U.S., and the one commodity they mentioned was gold. Chart them against the ETF that tracks the MSCI Emerging Markets index and tell me which trade has been working better for many months now ... totally unmentioned on their show ... But they'll talk U.S. econ and retail sales all day!!!
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LouisR · Newbie Joined: 20 Nov 2009 Posts: 4

I spoke with Charles Schwab 2 weeks ago and the current rate is 6.88% for borrowed amounts over $100,00.

With the US govt spending money like a drunkin' sailor. It's a no brainer the market will last another year.

Some how the money seems to always be used to buy Chinese goods. Recent track record says the Chinese companies will out perform the US companies. I hate to do it but I'm investing where the economy is demonstrating the best growth.

If the US executives can move the jobs overseas ... I can play that game and move my money overseas as well ... lol

rffrydr · Posted: Tue Dec 01, 2009 1:45 pm Post subject:

New margin rates now in force:

rffrydr · Posted: Tue Sep 01, 2009 9:11 pm Post subject:

Margin rates going up:

http://www.finra.org/Industry/Regulation/Notices/2009/P119907
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rffrydr · Posted: Tue Sep 01, 2009 8:13 pm Post subject:

Deutschebank terminates 2X long crude DXO claiming position limits imposed by MERC. But we know better.
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rffrydr · Posted: Sat Aug 15, 2009 8:34 pm Post subject:

Yes there are times, like right now with $70 crude....but it's in historic contango 'cause cushing OK where the contract is base is filled to the brim and assorted other reasons.

That's a good one to sell calls into (after you check the skew) mainly because IT won't wag THAT. After expiration you can buy your OTM puts and live with it.
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goldbug · Junior Poster Joined: 21 Jun 2009 Posts: 36

So, let me ask in simpler terms, you know USO lags the actual OIL price badly due to contango. If I predict that OIL price has topped and I want to short OIL, is USO a good bet to short? Or are there times when contango could be in reverse (backwardation)? Thanks.

rffrydr · Posted: Sat Aug 15, 2009 10:30 am Post subject:

For the "ultra-leveraged" yes, but you gotta wait for their exponential moves. We're just coming off the bottoms for the great VIX destruction visited these funds. Alot of burnt wallets on this stuff and burnt out managements.

The shorts I'm starting to focus on are crude, POT and CAF--both of which will require call writes to enter
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goldbug · Junior Poster Joined: 21 Jun 2009 Posts: 36

Are you suggesting that we should short these leveraged ETFs when the time is right?

By the way, SP500 and Nasdaq have reached a level that merits a *short* try:
http://www.tradingstocks.net/html/latest_opinion.html

But Prechter is a long term short, and the short ETFs are not good to hold beyond few days. May need to use futures.

rffrydr · Posted: Thu Jul 30, 2009 11:47 am Post subject:

Reining in the the wealth destructors:

http://ftalphaville.ft.com/blog/2009/07/30/64211/etf-blowup-continues/
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rffrydr · Posted: Wed Dec 24, 2008 9:17 am Post subject:

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rffrydr · Posted: Tue Dec 23, 2008 9:38 am Post subject:

Shorting the opposite (taking the leverage into account) may be the way to play "the house" on these financial frankensteins.
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