I can only imagine there was a big UCO holder suddenly sold massive amount of uco in his IB account right before market closed to make this happen.
Yes.. same settlement as always... but also same as always: it's the price at when the order to buy-back gets filled... And again, this doesn't necessarily have anything to do with IB and whether there was a big IB client selling their UCO shares. This could've easily been across the board with other brokers/clients affected as well.
I agree. If I wanted to short UCO I'd sell ITM calls on USO. USO is more liquid so tighter spread than UCO. If you want real 2x leverage, just sell 2x as many contracts.
I just finished reading the case that you cited. That customer (Feldman) is a POS and knew exactly what he was doing . He practically bullied the broker and got away with it because he's a whale. He even went as far as bragging on a message board. After reading the customers own words I can't believe the case against him was dismissed . WTF was the SEC thinking when they decided to let him off the hook,incredible ! https://www.sec.gov/litigation/admin/2012/33-9313.pdf
Decay from futures rolling and daily rebalancing in levered commodity ETFs benefits shorts. It may or may not be worth the borrow fee and risk of getting bought in.
Another disadvantage is the potential lose of shorting leveraged etf is thoerically unlimited but cannot gain more than 100% per trade.