question about 3x etfs

[brad52]

I was looking at FAS and FAZ today. One thing I noticed while

watching the option chain was that while FAS was down less than a

dollar both the calls and puts were trading at a loss!!! The put should

have been showing some kind of minimal gain to offset the loss

suffered by the call. What gives? Is there something in he nature of

the leverage? Any thoughts? Just trying to be logical. Thanks.

 

[TraderSU]

Quote from brad52:

I was looking at FAS and FAZ today. One thing I noticed while
watching the option chain was that while FAS was down less than a
dollar both the calls and puts were trading at a loss!!! The put should
have been showing some kind of minimal gain to offset the loss
suffered by the call. What gives? Is there something in he nature of
the leverage? Any thoughts? Just trying to be logical. Thanks.

Options premium on 3X etfs were killed today because of the drop in volatility. Did you look at VIX today?

 

[wouter]

Market direction is only one piece of that puzzle, volatility and time decay the other and don't forget that options pricing fluctuates a lot. It is probably the most inefficient pricing I have seen in the markets despite many arbitrage house working those markets.