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FAZ/FAS math
- Thread starter privador81
- Start date
maybe it's because it's friday, and I'm not following you here. When the R1fks goes down, FAZ goes up right?
if R1FKS goes back to 800, FAZ will be in the single digits or probably fairly close to zero, so i'm not exactly sure how it would EVER get back to 200 in that scenario.
????
if R1FKS goes back to 800, FAZ will be in the single digits or probably fairly close to zero, so i'm not exactly sure how it would EVER get back to 200 in that scenario.
????
Quote from jprad:
No, the underlying has to reset higher.
The R1KFS was around 800 when the FAZ started trading. It dropped to around 700 while the FAZ went over 200.
For a similar run over 200 to happen again, the R1KFS will have to first get back up over 800.
You're confused because jprad doesn't know what the hell he's talking about.
FAZ "seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index." Which means, for example, if the index declines 5% in one day FAZ seeks to rise 15% that day.
So if the index has a steady decline from where it closed today (501.31) into the 100s, FAZ will easily trade over 380. Try it with a spreadsheet and extended daily index declines of 4% or 5% (other amounts will work too). jprad is math challenged so maybe he thinks the index can only decline 5% a day for 20 days.
Again, not saying it's going to happen but it's definitely NOT impossible.
FAZ "seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index." Which means, for example, if the index declines 5% in one day FAZ seeks to rise 15% that day.
So if the index has a steady decline from where it closed today (501.31) into the 100s, FAZ will easily trade over 380. Try it with a spreadsheet and extended daily index declines of 4% or 5% (other amounts will work too). jprad is math challenged so maybe he thinks the index can only decline 5% a day for 20 days.
Again, not saying it's going to happen but it's definitely NOT impossible.
Quote from Tony O:
maybe it's because it's friday, and I'm not following you here. When the R1fks goes down, FAZ goes up right?
Quote from Trader666:
You're confused because jprad doesn't know what the hell he's talking about.
FAZ "seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index." Which means, for example, if the index declines 5% in one day FAZ seeks to rise 15% that day.
So if the index has a steady decline from where it closed today (501.31) into the 100s, FAZ will easily trade over 380. Try it with a spreadsheet and extended daily index declines of 4% or 5% (other amounts will work too). jprad is math challenged so maybe he thinks the index can only decline 5% a day for 20 days.
Again, not saying it's going to happen but it's definitely NOT impossible.
Hey sparky, try replicating the actual returns that the FAZ and the index experienced in the past and replicate them forward.
FTR, replicating the daily returns from 1/6 through 3/6 forward starting with today's closing prices would net an index of 96.44 and a FAZ of 325 after 115 trading days.
But, as I posted earlier, there would be all kinds of market intervention with the financials long before the index were allowed to drop 80%.
Just compare the UYG and SKF to see the disconnect the last time market intervention disrupted the inverse relationship.
BTW, sparky, compare the daily returns of the SKF, which is a 2x instrument, it's got much higher on it's last spike in percentage terms compared to the FAZ.
Figure that one out, Brainiac...
The only disconnect is in your puny brain because you have no idea how these work... even though it's only 7th grade math.
If you take the prices of the underlying indices and calculate theoretical FAS, FAZ, SKF and UYG prices and compare them to the actuals then maybe you'd have a clue.
Go ahead, jackass, you post spreadsheet graphs of actual vs theoretical prices for FAS and FAZ from Jan 2 -- today and I'll do it for UYG and SKF. That way neither of us can cheat and we can check each others' work.
If you take the prices of the underlying indices and calculate theoretical FAS, FAZ, SKF and UYG prices and compare them to the actuals then maybe you'd have a clue.
Go ahead, jackass, you post spreadsheet graphs of actual vs theoretical prices for FAS and FAZ from Jan 2 -- today and I'll do it for UYG and SKF. That way neither of us can cheat and we can check each others' work.
Quote from jprad:
Hey sparky, try replicating the actual returns that the FAZ and the index experienced in the past and replicate them forward.
FTR, replicating the daily returns from 1/6 through 3/6 forward starting with today's closing prices would net an index of 96.44 and a FAZ of 325 after 115 trading days.
But, as I posted earlier, there would be all kinds of market intervention with the financials long before the index were allowed to drop 80%.
Just compare the UYG and SKF to see the disconnect the last time market intervention disrupted the inverse relationship.
BTW, sparky, compare the daily returns of the SKF, which is a 2x instrument, it's got much higher on it's last spike in percentage terms compared to the FAZ.
Figure that one out, Brainiac...
Quote from Trader666:
Go ahead, jackass, you post spreadsheet graphs of actual vs theoretical prices for FAS and FAZ from Jan 2 -- today and I'll do it for UYG and SKF. That way neither of us can cheat and we can check each others' work.
I already posted the method, the duration and the end values.
If that's not enough for you then you're beyond hope.
Isn't that what I wrote?
Faz goes up when the index goes down?
Faz goes up when the index goes down?
Quote from Trader666:
You're confused because jprad doesn't know what the hell he's talking about.
FAZ "seeks daily investment results of 300% of the inverse (or opposite) of the price performance of the Russell 1000 Financial Services Index." Which means, for example, if the index declines 5% in one day FAZ seeks to rise 15% that day.
So if the index has a steady decline from where it closed today (501.31) into the 100s, FAZ will easily trade over 380. Try it with a spreadsheet and extended daily index declines of 4% or 5% (other amounts will work too). jprad is math challenged so maybe he thinks the index can only decline 5% a day for 20 days.
Again, not saying it's going to happen but it's definitely NOT impossible.
Quote from MrDODGE:
DO THE CALCULATIONS, THEY ARE VERY BASIC!!!!!!
It all depends on consutive declines in RIFIN.
If RIFIN loses 5% for the next 32 days straight (not probable) FAZ will be trading at $1,519.06 and RIFIN will be at $102.22.
Right, which is why I recommended using the actual returns of the actual downtrend that occurred from 1/6 through 3/6 and apply them starting with today's closing price.
Repeat the block of returns, and you're up where I said after 115 days.
And, again, it ain't happening because reality will interfere with letting the index drop 80% from today's close.