gon4beer

In Defense of Leveraged ETFs

I trade 2X ETF's ALL the time. If I want to make a bet that the market is going to move in a particular direction, and I'm right, then I MAKE MONEY-tracking error irrelevant. Isn't it better to make money rather than not doing something simply because there is some tracking error? The bid/ask spread on ETF's is MUCH smaller than most options, esp. when you look at the spread as a % of total price of the underlying instrument. BUT, if I were using ETF's to hedge, rather than to trade, I think the tracking error issue is much more relevant.