Shorting SPX using SPXU

[Scataphagos]

uh oh! knew it was too good to be true.

That's why I am trying to learn how to calculate SPXU values at various stages of S&P.

I wouldn't bother with that. (1) value would vary depending upon how long you've held it... leverage expenses, and (2) having the proper ratio will give high percentage of offset. You might even find that when you've become convinced of the market being bearish, you could up your SPXU position and actually make some $$$.

It's a waste of time and effort to attempt getting a "perfect 1:1 hedge at all times and prices".

 

[js4682603]

Probably not.... due to the costs of leverage being an expense.

So where do we stand now?

My reason for not buying put options is that they expire and I lose. As one guy said, if SPX goes to 4000, SPXU will be pennies and it will never return back to original value, then it will be a problem.

 

[Scataphagos]

So where do we stand now?

Check my earlier post.

If you want to hedge your SP long position, buy 1/3 of that amount in the SPXU. That's as close as you're likely to get. It's not that complicated. And you're unlikely to ever get the "perfect hedge", regardless. You're gnashing your teeth over a small amount of money... not worth it. There is no way to "perfectly" hedge all of the risk out of financial markets.

Think of hedging your portfolio like homeowners insurance. You pay a premium and you have a deductible. Those are your "risk costs"... against a catastrophe. Those are the costs of "hedging the value of your home".

 

[js4682603]

Check my earlier post.

If you want to hedge your SP long position, buy 1/3 of that amount in the SPXU. That's as close as you're likely to get. It's not that complicated. And you're unlikely to ever get the "perfect hedge", regardless. You're gnashing your teeth over a small amount of money... not worth it. There is no way to "perfectly" hedge all of the risk out of financial markets.

Think of hedging your portfolio like homeowners insurance. You pay a premium and you have a deductible. Those are your "risk costs"... against a catastrophe. Those are the costs of "hedging the value of your home".

I am not concerned about it being a perfect hedge at all. More concerned about SPXU becoming pennies IF SPX goes to 4000.

 

[Scataphagos]

I am not concerned about it being a perfect hedge at all. More concerned about SPXU becoming pennies IF SPX goes to 4000.

So what? It's your hedge. Once you get into a "hedged, break-even" position... you're no longer going to make or lose a significant amount of money, regardless.

Hedging should be a defense against a "short term situation of uncertainty". If you want a "long term hedge against adversity", just sell everything and go to cash. It's not rocket science. If you don't want to at least TRY to make money (you can't do that "risk free"), just put your money in the bank.

I don't mean to be offensive.... but geez.. you're getting to the point of being annoying... whining about the possibility of "losing a nickel" somewhere along the line. You need to put on your "big boy" pants and stop being afraid to "dip your toe into the water" if you ever want to make any significant money. Sheesh! YOU CAN'T MAKE ANY MONEY WITHOUT TAKING A RISK!!

If you're completely "risk adverse", just cash out and put your money into a CD and make your play later when you feel "the smoke has cleared". You can't make significant money without taking some degree of risk. Just learn to be sensible/disciplined about it.

 

[js4682603]

So what? It's your hedge. Once you get into a "hedged, break-even" position... you're no longer going to make or lose a significant amount of money, regardless.

Hedging should be a defense against a "short term situation of uncertainty". If you want a "long term hedge against adversity", just sell everything and go to cash. It's not rocket science. If you don't want to at least TRY to make money (you can't do that "risk free"), just put your money in the bank.

I don't mean to be offensive.... but geez.. you're getting to the point of being annoying... whining about the possibility of "losing a nickel" somewhere along the line. You need to put on your "big boy" pants and stop being afraid to "dip your toe into the water" if you ever want to make any significant money. Sheesh! YOU CAN'T MAKE ANY MONEY WITHOUT TAKING A RISK!!

If you're completely "risk adverse", just cash out and put your money into a CD.

I thought we are only analyzing SPXU and how it behaves on S&P movement. I know what a hedge is. If SPXU goes to pennies and never returns to its original value when S&P goes to 4000, then it's not all that different to options. I know I will gain in the long position.


My question was to understand how SPXU behaves and if it can be used in place of options or shorting SPY etf. If I understand how SPXU works, then I will have one more tool in my arsenal whether I use it as a hedge or for speculation or for income.Please don't take upon yourself to be responsible for my situation and my fears and whatnot and assume I will only use it for hedging.

SPXU was around 1700 during 2008 and it is 10 now when S&P quadrupled. My question was where will it be if the S&P again goes back to where it was in 2008.

 

[Scataphagos]

I thought we are only analyzing SPXU and how it behaves on S&P movement. I know what a hedge is. If SPXU goes to pennies and never returns to its original value when S&P goes to 4000, then it's not all that different to options. I know I will gain in the long position.


My question was to understand how SPXU behaves and if it can be used in place of options or shorting SPY etf. If I understand how SPXU works, then I will have one more tool in my arsenal whether I use it as a hedge or for speculation or for income.Please don't take upon yourself to be responsible for my situation and my fears and whatnot and assume I will only use it for hedging.

SPXU was around 1700 during 2008 and it is 10 now when S&P quadrupled. My question was where will it be if the S&P again goes back to where it was in 2008.

You're not "seeing the forest for the trees". If you are long SPX... and long 1/3 SPXU, you are effectively "hedged"... regardless. What matter is the "percent change in each". The "Price per share" is IRRELEVANT! STOP FOCUSING ON THAT!

 

[js4682603]

You're not "seeing the forest for the trees". If you are long SPX... and long 1/3 SPXU, you are effectively "hedged"... regardless. What matter is the "percent change in each". The "Price per share" is IRRELEVANT! STOP FOCUSING ON THAT!

again if you are focusing on "my scenario". Now, I am not talking about hedging, maybe I just want to speculate on the downside. is SPXU better than deep in the money put option. That's another "scenario". STOP FOCUSING ON THE FIRST ONE!

 

[Scataphagos]

again if you are focusing on "my scenario". Now, I am not talking about hedging, maybe I just want to speculate on the downside. is SPXU better than deep in the money put option. That's another "scenario". STOP FOCUSING ON THE FIRST ONE!

You lost me. You apparently want to argue "some notion", which I haven't been able to decipher yet. Nobody else is trying to help you, yet you argue STUPIDLY like my wife. No more for me. ON IGNORE!!

 

[js4682603]

You lost me. You argue STUPIDLY like my wife. No more for me. ON IGNORE!!

Communication breaks down when one has a tunnel vision