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

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%?

 

That is twice the move per day. So unless you think the spy will drop 50% in one day, then no.

 

no, because it is incremental. The SPY would have to somehow instantly fall 50% for the SSO to fall 100%.

 

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.

 

Halt followed by a reverse split.

 

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%

 

This can be solved via a reverse split.