All things STOCKS

#9,102
#9,102
Carp said:
$RKT having a nice day. It's overdue for it's monthly pop. Would be nice to see it fill that gap before the holiday weekend.
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It’s up about fitty cent today, but it’s still off about $6 from earlier in May. I might have bought more today had it instead dropped by the fifty cents.
 
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#9,109
#9,109
kiddiedoc said:
Thoughts on SPXS?
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Good, safe way to participate in market declines. Investors losses are capped at their investment in the fund. Long term holders are almost guaranteed to lose nearly everything invested in SPXS. SPXS is probably best used for short term trading or as a hedge against long (bullish) positions.

Looking at that chart and anybody shorting SPXS would have had spectacular returns. I would think that it would be difficult to access SPXS shares to short and if it is possible the potential losses would be unlimited.

I’ve never shorted a security. I don’t even know if shorting SPXS is allowed even if shares are found that could be borrowed. Instead of ever shorting, I would always instead buy something like SPXS. FAZ is similar, but is the counter to FAS… both leveraged plays on the financial industry equities.

SPXS is almost a wasting asset much like owning a PUT option, but technically does not have an expiration date.

A44F008C-361B-44FA-9237-D82A13109F36.png
 
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#9,110
#9,110
Thunder Good-Oil said:
Good, safe way to participate in market declines. Investors losses are capped at their investment in the fund. Long term holders are almost guaranteed to lose nearly everything invested in SPXS. SPXS is probably best used for short term trading or as a hedge against long (bullish) positions.

Looking at that chart and anybody shorting SPXS would have had spectacular returns. I would think that it would be difficult to access SPXS shares to short and if it is possible the potential losses would be unlimited.

I’ve never shorted a security. I don’t even know if shorting SPXS is allowed even if shares are found that could be borrowed. Instead of ever shorting, I would always instead buy something like SPXS. FAZ is similar, but is the counter to FAS… both leveraged plays on the financial industry equities.

SPXS is almost a wasting asset much like owning a PUT option, but technically does not have an expiration date.

View attachment 370580
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So, if I understand correctly, you would buy SPXS if you are expecting a market decline/crash? It bets on securities to decline, and that increase the price of their ETF?

I could be way off on that thinking, so correct me if I'm wrong.
 
#9,111
#9,111
kiddiedoc said:
So, if I understand correctly, you would buy SPXS if you are expecting a market decline/crash? It bets on securities to decline, and that increase the price of their ETF?

I could be way off on that thinking, so correct me if I'm wrong.
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Yes. BUT… these 3x leveraged BEAR securities are typically not recommended to be held for long periods of time. The prospectus probably suggests only holding SPXS shares for very brief periods of time… like a day or two. Probably less than a week. Look at that 10 year chart. $100,000 plus fell to about $25. It is a bit deceptive as the initial price was never $100,000/share. Instead there would have been a lot of reverse splits during the free fall so that the current price of a share isn’t a fraction of a penny.

Take a theoretical look at an opposite example… a 3x leveraged BULL fund. Say it tracks the S&P 500 and it is bought when the average is at 4,000 and the investment is $400. If the underlying average drops 25%, the fund will lose 75% of it’s value. So the average is now 3,000 and the investment is now $100. Then if the underlying average goes up by 33.3% the average is back to 4,000 but the investment goes up by 3x 33.3% or 100%. So the investment is now worth $200 even though the average is right back to the starting point of 4,000. This is the risk of using that 3x leverage. Also worth noting that a 25% drop in value (of anything) requires a 33.3% increase to get back to even. A 50% drop (in anything) requires a 100% increase to get back to even.

SPXS is extremely risky, but as stated earlier the investor’s loss is limited to whatever they invest. Short a security and the potential losses are unlimited. Buy PUT options and, like the SPXS ETF, the investor’s loss is limited to whatever they buy.

There are also BEAR funds that are not leveraged. They trade much closer to an exact inverse. 4,000 average drops 25% to 3,000 and the $400 investment if in a non levered BEAR fund rises by about 25% to $500. In reality all positive returns will slightly lag the up changes in the underlying average due to fees and administrative charges assessed by the fund managers. The declines will be slightly more due to the fees/charges.

I think that DOG is a non-leveraged (1x), inverse (BEAR) security the moves opposite of the DJIA. Look at how it’s price changes compared to DIA. If DIA is off about 0.5% in a day then DOG should be up by about 0.5% in that same time frame.

There are several inverse funds. 1x, 2x, and 3x levered.

Hopefully the guys on the thread that have worked in the industry are checking my comments… it’s not too difficult to accidentally post in error. They might also see a key takeaway that I’ve overlooked.

Basically, SPXS will be a wild ride that will most likely lose value over time. It would have been an outstanding security to own during the 2008-09 Great Recession and the early 2020 COVID crash. But it is best used as a very short term trade.
 
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#9,114
#9,114
kiddiedoc said:
So, if I understand correctly, you would buy SPXS if you are expecting a market decline/crash? It bets on securities to decline, and that increase the price of their ETF?

I could be way off on that thinking, so correct me if I'm wrong.
Click to expand...
For emphasis YOU CANT HOLD IT. You need to be right immediately. It doesn’t “recover” later.
 
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#9,117
#9,117
I actually set up a put position on SPXU in the fall of 2019 (betting the decline of the short 3x levered sp500). The way it moves, I had a hard time hanging on, but it was a good position. Long term the deterioration in it is obvious but the put sellers price them accordingly.
 
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#9,118
#9,118
Thinking about nibbling on Cathie’s ARKK. I don’t know which would be my 2nd choice.

I didn’t realize that she is 65. I thought that she was forty-something.
 
#9,119
#9,119
Carp said:
I'm still liking $CLDR to fill that gap back up at some point, though I reduced my position to add more $RKT.
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On vacay, but had to pop in and brag on this one. Don't know if I'll sell or not, but up a good bit here.
 
#9,120
#9,120
Also, AMC diluting again. These Reddit investors are gonna be in for a rude awakening sooner rather than later imo.
 
#9,122
#9,122
Carp said:
Also, AMC diluting again. These Reddit investors are gonna be in for a rude awakening sooner rather than later imo.
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Held at $10...sold too soon at $15. Got bored got back in at $26...closed today at $32. If it spikes again I'll sell.
 
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