I went long thousands of shares of SOXL in one of my accounts back in April with a volatility/price target on the underlying SOX index as an exit signal. Is it free money lolol? Hell no. But so long as the trader is experienced, mindful of how these ETFs work, sticks to equity based products, avoids holding inverses, and stays cognizant of the dangers it's a manageable risk. That said a lot of newbs will get rekt on a big drawdown and their inevitable capitulation and nobody should even contemplate holding commodity or volatility based leveraged ETFs long term, looking at you XIV, WTI, et al.
Here's a paper that is suggestive of how one might manage the risks of holding UPRO long term and do extremely well. I haven't verified their backtest but for anybody interested here's the link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701
The upshot is a simulated UPRO going back to 1928 would never have experienced a high enough single day drop to liquidate and would have outperformed the unleveraged S&P by orders of magnitude.
Here's a paper that is suggestive of how one might manage the risks of holding UPRO long term and do extremely well. I haven't verified their backtest but for anybody interested here's the link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701
The upshot is a simulated UPRO going back to 1928 would never have experienced a high enough single day drop to liquidate and would have outperformed the unleveraged S&P by orders of magnitude.
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