If SPY fell to $45, what would happen to SSO?

[IronFist]

Isn't SSO supposed to make twice the move of SPY?

So if SPY fell to $45, a 50% fall, shouldn't SSO fall 100%?

 

[Norman_Shey]

That is twice the move per day. So unless you think the spy will drop 50% in one day, then no.

 

[stock_trad3r]

Quote from IronFist:

Isn't SSO supposed to make twice the move of SPY?

So if SPY fell to $45, a 50% fall, shouldn't SSO fall 100%?

no, because it is incremental. The SPY would have to somehow instantly fall 50% for the SSO to fall 100%.

 

[ba1]

You probably would get a closer-to-reality answer if you calculate it as two successive 25% losses. 0.75 x 0.75 = 0.5625 for a ~ 44% loss. Remember it is a goal, with no guarantees that it perfectly tracks the underlying stock or indices.

 

[Clubber Lang]

Halt followed by a reverse split.

 

[blackjack007]

Quote from ba1:

You probably would get a closer-to-reality answer if you calculate it as two successive 25% losses. 0.75 x 0.75 = 0.5625 for a ~ 44% loss. Remember it is a goal, with no guarantees that it perfectly tracks the underlying stock or indices.

a 25% loss on spx would result in a 50% loss on sso, so 0.5 x 0.5 = .25 = 75% loss on sso, not 44%

 

[luckybastard]

This can be solved via a reverse split.