Is it possible for leveraged ETFs (SSO, DDM) to get overvalued relative to the index?

Quote from crgarcia:

Is it possible for leveraged ETFs (SSO, DDM) to get overvalued relative to the index?

Sure, but that will create instant arb and will evaporate fast. The other way they can stay undevalued for some time because of people unwilling to short the underline most of the time.
 
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