I bought some oil 3x bull etf for fun in early december 2015, it was around $6 while oil future was around $40. Now is around 3 months later, oil future is back to around $37.5 but the etf price is only around $2.5 which is not even half of $6. I know there are factors like contango and etf management fee but this is just 3 months time period. If anyone can show some explaination or math would be very helpful. Luckily I just bid very small amount of money.
3 months of roll + contango + 3x + other costs = doesn't look too excessive. A bit perhaps. You have to read through the details of the ETN to find out why. In any case, no 3x ETF / ETN is designed for a 3 month hold. It is a very short term vehicle where you should be in and out before roll of the ETF's underlying
What is the different between roll and contango? For short term trading like day trade I think future would be much easier to caculate the strategy and may be more fair.
Treat UWTI like option premium, if bullish, better be right on direction and time. If bearish, then it's cake, just short the thing.
Here's the prospectus. I glanced through the first part. Just read the bullet points on pages 18-21 beginning with the paragraph that starts with "What are some of the risks with ETNs? and it should answer your questions. It has the formula they use to determine NAV. http://app.velocitysharesetns.com/f...NG_SUPPLEMENT_No__VLS_ETN-3_A27_long-form.PDF