I have been assigned shares of mstu @ $12, and am looking at taking advantage from this drop to lower my avg price. Going by the chart this will return to $12 on the next retrace. My break even is $8.55 if I factor in premium received. Last time we were at $12 MSTR was at $329. Is there some NAV decay, mitigating factor from 2x daily leverage being rebalanced daily that will stop this from being $12 should MSTR reach $329? I am not referring to the "if a stock drops from $20 to $10, it has dropped 50%, and to go from $10 to $20 it has to increase by 100% so it is harder" fallacy. I'm talking about the stock actually being priced differently by the market for the reasons above. I have searched reddit but getting conflicting answers...the prospectus states this is intended as a short term hold not a long term due to volatility, but essentially isn't it similar to an options contract that suffers time decay, but never actually expires? "The Fund will lose money if the underlying security performance is flat over time, and as a result of daily rebalancing, the underlying security’s volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the underlying security’s performance increases over a period longer than a single day" LOL so it can lose money down, sideways AND up??? Sounds like a long option to me...
It didn't age very well then. Doubled the losses so far? Put the lambo as collateral and you will be fine
???? You don't just bail out and give all your premium back lol. You guys are such punters. No wonder none of you have a 2008 Lambo. Anyway, so no idea? I want to average down large.
They'll just do a reverse split. I'm not talking about the risk to zero I'm talking about the recovery. Everybody wants to answer a question that hasn't been asked around here LOL.
I'm just wanting to see the explanation of if MSTR returns to $329ish will MSTU return to $12ish like it was a few months ago. If not then an explanation on why. I don't care about % loss and % gains...just want to know about the mechanics of the pricing. I imagine it has everything to do with volatility. So it will require a sustained move up to spike volatility and then we are off to the races. Case in point: Dec17 btcusd: 108k Dec 17 MSTR: $434 Jan20 btcusd: 108k Jan20 MSTR: $399 When bitcoin hit 108k the first time on Dec17 volatility was building for the entire rally..less so on Jan20. https://bitbo.io/volatility/
Currently MSTR = $276 & MSTU = $5.73 In order for MSTU = $12 you would need a 45% move on MSTR but it depends on how it gets there. I mean if MSTR goes up 10% per day for the next 4 days in a row it could get there faster, even though it only adds up to 40% since the accumulation is geometric: 10% on MSTR --> 1.1^2 = 1.21, (1.1^2)^4 = 107.4% move.
Yeah so like I said...it all depends on volatility...or volatility drag which is essentially what I just demonstrated while posting in between laundry loads lol.