If SPY fell to $45, what would happen to SSO?

Discussion in 'Trading' started by IronFist, Dec 17, 2008.

  1. Isn't SSO supposed to make twice the move of SPY?

    So if SPY fell to $45, a 50% fall, shouldn't SSO fall 100%?
  2. That is twice the move per day. So unless you think the spy will drop 50% in one day, then no.
  3. no, because it is incremental. The SPY would have to somehow instantly fall 50% for the SSO to fall 100%.
  4. ba1


    You probably would get a closer-to-reality answer if you calculate it as two successive 25% losses. 0.75 x 0.75 = 0.5625 for a ~ 44% loss. Remember it is a goal, with no guarantees that it perfectly tracks the underlying stock or indices.
  5. Halt followed by a reverse split.
  6. a 25% loss on spx would result in a 50% loss on sso, so 0.5 x 0.5 = .25 = 75% loss on sso, not 44%
  7. This can be solved via a reverse split.