shorting FAS and FAZ at the same time

Did anyone try to short them at the same time?

 

Why?

 

What would be the point?

That one would drop more than the other rises?

Likely some days yes, some days no.

If there was any kind of edge doing that it would be arbed away in no time, which means there isn't. Or it is so small you need big, bug bucks to take advantage of it.

 

You would make up the borrowing cost in volume? The answer has to be in the palm of our hand!

 

I shorted a basket of triple leveraged ETFs (FAS/FAZ...NUGT/DUST...UGAZ/DGAZ...etc) a few years ago.
If you hold long enough you'll make a profit because of the way they're calculated on a daily basis.

BUT, occasionally a certain ETF can go crazy on the upside.
You can short $10K worth of stock & in a short period of time that $10K short can be $100K short. Will you have the spare cash setting around if needed? THAT'S why I quit. I had the spare cash but how long will it take before the deep-in-the-red position gets back to a profit?

I made a little money doing it but you better have patience & spare cash. With interest rates at +5% and rising, you need to outrun that also.

 

BIG money does it all the time.

 

This is what I want to hear.

I feel it is a sure win. As you said, you have to hold on to it long enough, and you also need to have spare cash. What were the returns of your trades?

 

I didn't record the results.
I had 5-8 pairs that I held for a few months.
In the long run I think you'll eventually run into a strong move that will wipe out your profits.
It's similar to option writing. You can trickle in the profits but suddenly fall off a cliff as the strong move up will wipe out profits so quickly. Holding on will eventually get to a profit but after reviewing, it can take a considerable amount of time to get the red position into the green.
Wasn't worth it to me.
Maybe the option gurus here can come up with a way to catch the daily calibration profit & limit the risk. I looked at the options a bit but didn't come up with anything simple.

 

So big shocks are the most tricky problem for this method.

 

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MAYBE right on that
But NOT much on FAZ+ FAS with average grass hopper volume of 1 or 2 million.
But that was a great cry quote+ cry of a 7 year old girl ''I LOST, I LOST my pet grasshopper'' Sorry grasshopper volume is declining 2023\ its enough to make some one cry.