What are the caveats on selling a SSF on, say, FAZ, instead of shorting or buying a put. I assume the price has the time premium or hard to barrow % built in. And yes, there is the spread. But with FAZ, it seems like an almost no-brainer. YEs, long-tail risk, but that can be hedged, still leaving an instrument that is built to decline and generally does in the intermediate-long term. What am I missing?
Single Stock Futures on Inverse Leveraged ETFs
- Thread starter Kirribilli
- Start date
I tried to do the same but couldn't. SSF on FAZ was listed on OneChicago, but there is no bid/ask price from my broker, I am wondering where do you trade this SSF? I mean which broker?
First, almost none of the SSFs have even a bid/ask, especially small caps like 3x etfs. Second, to the OP make sure you understand the daily percentage tracking of 3x and inverse etfs. They aren't guaranteed to go down and in some choppy markets you can really get burned if your etf is essentially rebalancing daily and your hedge isn't.
Sounds like a margin call waiting to happen.