question about these double leverage / triple leverage ETFs

S

Sky123987

Hi,

I use SPY a lot in order to hedge positions in case I got either too long or too short in the mkt. Is there an double or triple leverage ETF that tracks the overall mkt that has pretty big liquity and has a high stock price?

Then the cost of heding will go down


Also...
Is there any interest rate cost built in to these positions? If so is it the same interest rate as futures?
 
ETF's are continuous but there is an expense factor that is a drag on the fund's performance. There is the management fee and there sure must be an "inefficiency" or cost of hedging factor after all they are adjusting their positions frequently, commissions, slippage, etc. The carry on the futures (if that is how they hedge) is one of the components of the expense.

For a quicky hedge the pro rated expense drag may not be much but over time they are significant.

To visualize this take an double leverage ETF and compare it's movement to the underlying ETF on a few swings.

I have looked only at one good swing. Between the Nov. 4 high to the Nov.13 low QQQQ declined 19.79% and QLD declined 36.36%, less then 2x the QQQQ decline. Wow.

GC
 
Something I've been wondering about: wouldn't you be better off shorting the long fund than buying the short fund, because then you'd have slippage, commissions etc working for you instead of against?
 
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