One of my smart traders told me about this.... big news: https://www.nasdaq.com/articles/the-sec-approves-single-stock-leveraged-and-inverse-etfs https://etfdb.com/etf-prime/etf-prime-sec-approval-of-derivativ-single-stock-etfs/ https://www.sec.gov/news/statement/crenshaw-single-stock-etfs-20220711 https://www.etftrends.com/sec-issues-warnings-over-single-stock-leveraged-inverse-etfs/
I like the articles you posted. My first reaction was "WTF. Why?". But each of those articles talked about the risks which many retail investors/traders might not understand. Imagine buying a TWTR ETF on the 7th thinking it's turned the corner. By Friday afternoon, you're thinking "Uh oh. But hey, I'll just hold it over the weekend". By the middle of the day on Monday, after the over night resets and the continued decline, you're shitting your pants, so you finally dump it. Oops. I guess I could imagine day trading them if I had limited funds. But there is so much moving on a daily basis, you really don't need much leverage. Just look at NVAX and PLRX this week.
Would've been great to short TSLA . I Really like this because you can short swing trade in a retirement or cash account I'll follow to see liquidity and gap size as these launch.
Hmm.. where does the risk end up? If you are short TSLA by short stock, synthetic short in the options market, net short single-stock future you carry infinite risk. Who does the company behind the ETF transfer that risk to? MM's in the option markets? they then transfer it on to someone else.
You can trade options in an IRA. I do it all the time in my TDA Roth. And my risk is always pre-defined. If I were long TWTR calls (I wasn't) as the stock got smoked, big deal. Move on. Next trade. Long a leveraged ETF? Again, Oops.
This could present some interesting opportunities for pair trading versus the respective ETFs where returns would be too low with unleveraged instruments.
Seems completely unnecessary unless you want to short specific stocks in an IRA or 401k that does not allow option trading.
They certainly are necessary. You are just on the wrong side of the fence as a retail trader! Fees, option spreads and spreads on these ETFs are going to make someone a bunch of money.
Awesome news. This would be like the leveraged ETFs - using futures to accomplish the leverage, correct?