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carey_jim » Comments » BGU

  • As Double Leverage ETFs Push Market Volatility, Can They Blow Up? [View article]
    The ProShares double inverse ETFs SRS and SKF deserve some analysis also.

    SRS, for example, starts around May of 2007 at a share price of around $65 trading a few thousand shares a day and quickly rises to a volume of around 30 thousand shares a day.

    SRS trades in a range between 65 and about 110 for a almost two years (disappointing its shareholders by seeming to completely ignore the housing crisis) with a short-lived break out to about 140 but by then its volume has risen to close to 10 million shares a day.

    Then it has a quick double spike reaching a high of 216 and then plunges to a low of around 60 which is below its starting price but with a volume of 18 MILLION SHARES A DAY.

    It looks like a sure buy but something is rotten in the state of Denmark, I'm afraid. (There's no free lunch on Wall Street unless the food is rotten.)

    It seems that it is being used primarily as a convenient day trading vehicle only and I don't know what the consequences will be.
    Dec 17 12:20 pm |Rating: 0 0 |Link to Comment
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