i've seen a few people on yahoo who say that the 2x and 3x etfs might get banned. do you think it would actually happen? i also found this link where cramer urges the sec to ban skf - http://www.cnbc.com/id/29016503
I have seen the video. In my opinion the arguments this person makes are nonsense. You cannot point to a piece of a price curve and say that an instrument does not work (or that it works) ... What is the target of this video? To me, it sounds quite offensive, because it is an insult to intelligence. SKF is for intraday trading. And for that it works fine and is actually very useful. If it not existed, it should certainly be reinvented. And same holds is for the other ultra... T
I'd say CME/CBoT is already actively lobbying against these ETFs. Many traders have shifted into stocks and that's one of the major reasons they lose so much vol. A fair step would be, they lower their fees accross the boards. But they don't want to be fair. Everyone knows that.
In my (intraday) approach UYG, while being ok, seems to have a rather slow tickrate (compared to skf), which therefore makes available less data (to a given strategy) in a given time interval. T
The SKF is at times responsible for 20 to 30% of the underlying stocks trading volume for the day because it has to clean up the books on the swaps by the close. Therefore, big money can game the move because they know what the managers managing the moves of the SKF (and UYG and others) have to be by the end of the day. They are adding massive volatility to the financial sector which is at the root of our issues. The SKF isn't so much a problem in normal times, but these aren't normal - and the moves it is causing in the underlying stocks are pissing the big money off. Which is why they very well may be banned. SKF are totally daytrading instruments though most aren't aware of it. If there were you'd never hold the instrument overnight because the only thing it is designed to do it to track intraday performance x2. This too, is also fine most of the time. But I think it's really starting to wear some big money out, and the big money has the connections to do what it wants.