AlexR

More Fun with Levered ETFs

Some of these ETFs are subject to contango, backwardation, and good old "slippage" in the futures markets. The ones that buy options are also subject to time decay, a lose/lose proposition. One way to avoid these inefficiencies are the ETNs and the Paired Trusts like UOY / DOY. But those have their own issues. There is no free lunch. Really if you want very efficient leverage on the long side, just buy high-beta stocks without margin. On the short side, just forget it.