Why DGAZ? Just buy nat gas. Either buy the futures, buy UNG or buy options on UNG. The 3x ETF's don't work. Long or short. Of course you can't short a 3x ETF. You can't short any of them because of the contango.
The ACD Method
- Thread starter sbrowne126
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Why DGAZ? Just buy nat gas. Either buy the futures, buy UNG or buy options on UNG. The 3x ETF's don't work. Long or short. Of course you can't short a 3x ETF. You can't short any of them because of the contango.
DGAZ is the best vehicle to short for a nat gas long play because of the decay(from a stock perspective). I know they don't work in the long run, hence the short. Dependant upon the levered ETF, they are shortable and sometimes optionable.
Just like in the long run if you want to short vol, don't short vix calls or crap like that, short VXX.
Yes, Futures would be most ideal leverage situation. But if I were trading a stock, DGAZ short would be the ideal stock because I get the move plus the decay. a 10% move in nat gas would be down 30% on DGAZ. So that puts it at 65. Nat gas drops 10% after that and DGAZ goes up to to 85. Nat gas is the same price as it was before but I've pocketed $10 on the decay of DGAZ.
Yes, I completely understand the point behind the decay but that is precisely why you can't short them. And if they are shortable, the borrow rate is going to exceed 100% and it's going to kill any edge from the decay. Trust me when I say this, there is no edge in them. What you do get is shitty liquidity.
Yeah, I figured you understood it. I hope it helps other people reading it.
I disagree on the borrow rate being 100% for some of them. You need a better clearing firm
GS has always charged highway robbery for the borrow of these.Yes, liquidity and big spreads are an issue but there's more than enough ECN's willing to arb this stuff in line. Back to lurking
Quote from Term:
Yeah, I figured you understood it. I hope it helps other people reading it.
I disagree on the borrow rate being 100% for some of them. You need a better clearing firm
Yes, liquidity and big spreads are an issue but there's more than enough ECN's willing to arb this stuff in line. Back to lurking
I would bet that IB charges over 100% for DGAZ. Just a guess. You can call them and ask. I don't want to keep beating this into the ground but it's been discussed at length on this forum on why you can't make a billion dollars shorting all the 3x ETF's.
Finally looks like the market is firming up a bit here... I have weekly aups in everything besides a few sectors:
XRT, FCX, EEM, X, and SMH.
The short-term momentum has definately swung to the upside in just about everything...Tough trying to be short the market into the end of the month!
Also don't forget about the failed quarterlies in just about every asset class lol...Me thinks we go higher !
XRT, FCX, EEM, X, and SMH.
The short-term momentum has definately swung to the upside in just about everything...Tough trying to be short the market into the end of the month!
Also don't forget about the failed quarterlies in just about every asset class lol...Me thinks we go higher !
Yup, take it from the idiot who tried to be short on Tuesday, (that's me). Thank god ACD kept my losses small!
I thought there might be a little more to this correction, but the price action is telling us otherwise. Even the XLY, which looked weak this week coming into today managed a weekly A up.
Natty Gas bounced confirmed a weekly A up today late in the session. As I mentioned before, this type of trade allows you to attempt to get long off the failed QTR A down but you are buying on strength, not on weakness. I did not get my trade on today. I WILL get it on tomorrow.
Today we finally got that wick on the failed QTR A up on soybeans. I got in prematurely at the monthly level anticipating a failed QTR A up.
Shan has given me a little bit of grief over this trade using terms like "fader", etc. LOL. He knows me to primarily being someone who goes with the trend. As I've mentioned before, strong trends tend to end at the QTR levels and beans have rallied almost 50% in a few months.
I am not short futures and I have no upside risk. What I do have is a nice shot to make some money on the downside.
Shan has given me a little bit of grief over this trade using terms like "fader", etc. LOL. He knows me to primarily being someone who goes with the trend. As I've mentioned before, strong trends tend to end at the QTR levels and beans have rallied almost 50% in a few months.
I am not short futures and I have no upside risk. What I do have is a nice shot to make some money on the downside.
Gold continues to be dead money and it continues to hug the monthly A down around 1645. Can't seem to break that level but there also is an absence of any kind of a bid. The QTR A down is around 1558 and it feels like we want to test that again. We failed at the weekly A up. So to sum up, Gold is a mess. Stay away!