FAZ/FAS math

chuckybrown70 · Mar 27, 2009

sorry to interrupt, but i am super intrigued by this situation. it seems that both of these etfs will eventually hit 0.

i know we cant short them, so how can we make money off of these etfs? this seems like a huge opportunity.

is there some rule that when the price gets to a certain level they will reset the price????

i went to their site, but did not see anything mentioned.

jprad · Mar 27, 2009

Quote from chuckybrown70:

sorry to interrupt, but i am super intrigued by this situation. it seems that both of these etfs will eventually hit 0.

i know we cant short them, so how can we make money off of these etfs? this seems like a huge opportunity.

is there some rule that when the price gets to a certain level they will reset the price????

i went to their site, but did not see anything mentioned.

You're absolutely right, they have a limited lifespan.

Take what you can, but don't get greedy. This is one case where pigs will definately get slaughtered.

m22au · Mar 28, 2009

There has been speculation that FAS may do a reverse split, however nothing has been announced.

http://247wallst.com/2009/03/13/would-direxion-financial-bull-3x-consider-reverse-split-fas-faz/

Keep in mind that these ETFs might not ever hit zero, however it is likely that they will approach zero.

Quote from chuckybrown70:

sorry to interrupt, but i am super intrigued by this situation. it seems that both of these etfs will eventually hit 0.

i know we cant short them, so how can we make money off of these etfs? this seems like a huge opportunity.

is there some rule that when the price gets to a certain level they will reset the price????

i went to their site, but did not see anything mentioned.

Trader666 · Mar 28, 2009

No, you're an idiot because you said it was not possible for FAZ to go above 380, which it could do with the index declining to the upper 100s.

As far as "reality interfering," the index went to the low 300s on March 6, so it's not out of the question it could return there and go 100+ points lower.

Apparently reality can't interfere with your brain. Have you thought of retaking 7th grade math? I think it would really help you.

Quote from jprad:

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.

Trader666 · Mar 28, 2009

Your numbers are actually for 31 days, 32 would be 1746.92 and 97.11... but at least you understand this, unlike jprad

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.

Trader666 · Mar 28, 2009

Yes, sorry, I was ragging on jprad not you.

Quote from Tony O:

Isn't that what I wrote?

Faz goes up when the index goes down?

jprad · Mar 28, 2009

Quote from Trader666:

No, you're an idiot because you said it was not possible for FAZ to go above 380, which it could do with the index declining to the upper 100s.

Give it a rest already. I've shown that a steady decline using actual returns would have the index breaking below 100 with the FAZ still below 380, 15% below.

As far as "reality interfering," the index went to the low 300s on March 6, so it's not out of the question it could return there and go 100+ points lower.

I didn't post the final index value that would be reached once the FAZ went above 380 for a reason -- to see if you'd take the time to back up any of your bullshit with actual facts.

Thanks for proving that you're all talk, opinion and theory.

You must be related to stock_trad3r if you think that the index could drop almost 75% below 300 without some sort of market intervention occurring first.

Trader666 · Mar 28, 2009

Oh please... you pigheadedly said it was "not possible" for FAZ to trade above 380... you even made up some garbage about the index having to reset. ROTFLMAO!!!! Then, AFTER I and others called you on it you tried to BS your way out of it like you are now.

If you could do 7th grade math you'd know that a steady decline of 3% a day for 35 days would take the index to 172.63 and FAZ to 407.26. The "actual returns" you speak of are your lame attempt to keep from looking like an idiot that isn't working. Grow up little boy.

Quote from jprad:

Give it a rest already. I've shown that a steady decline using actual returns would have the index breaking below 100 with the FAZ still below 380, 15% below.

Remember this?

Quote from jprad:
Not possible. All trading in financials would stop long before the index came close to zero.

Quote from Trader666:
FAZ could easily go to 380. All it would take is a steady, sustained decline in the Russell 1000 Financial Services Index. Do the math, it's simple...not rocket science.

More...

And this?

Quote from jprad:
It's simply impossible for any leveraged inverse ETF to trade above it's previous high when the underlying instruments they depend on have not reset to levels well above where it was when the inverse ETF began it's previous run.

And this? LOL

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.

jprad · Mar 28, 2009

Quote from Trader666:

If you could do 7th grade math you'd know that a steady decline of 3% a day for 35 days would take the index to 172.63 and FAZ to 407.26. The "actual returns" you speak of are your lame attempt to keep from looking like an idiot that isn't working. Grow up little boy.

You contrived example would, in reality, never happen.

You're either disingenuous or a complete fool to try to argue otherwise.

Any downtrend, no matter how steady, is going to have retracements along the way. Which is exactly why I suggested using the actual daily returns of each that OCCURRED IN REALITY to walk forward from.

It's those retracements, no matter how small, that completely wreck your argument.

Trader666 · Mar 29, 2009

Please consider taking a 7th grade math course and changing your user id because you're wrong yet again and you've lost all credibility.

For the record, this debate was never about if what happened earlier this year could push FAZ from current levels to over 380... you keep throwing up red herrings in a lame attempt to save face. But that's OK, it's all in black and white in this thread and I'll just deal with your latest "thinking" about retracements. And guess what? You're wrong again!

You said that retracements, "no matter how small" completely "wreck" my argument... well how about 10% retracements NOT wrecking it?

Starting with the index and FAZ at Friday's closes of 501.31 and 19.95, let's say we have four down days of 5% each followed by a retracement of 10% and that sequence continues... after 64 trading days the index would be 109.26 and FAZ would be 395.74. Change the retracements to 5% and after 37 trading days the index is at 151.4 and FAZ is 423.46.

Maybe you should stop digging yourself in deeper here and take that 7th grade math course...

Quote from jprad:

Any downtrend, no matter how steady, is going to have retracements along the way. Which is exactly why I suggested using the actual daily returns of each that OCCURRED IN REALITY to walk forward from.

It's those retracements, no matter how small, that completely wreck your argument.