Shorting SPX using SPXU

Discussion in 'ETFs' started by js4682603, Jan 23, 2018.

  1. SPXU is -3x etf for S&P and is trading at 9.50 today when S&P is at 2835. IF S&P crashes to 2000 and then to 1000, what will be SPXU trading at? Can any gurus take the time to answer please.
     
  2. Hard to calculate, but the gain could be huge. SPXU, split adjusted(?) was 1685 in 2009. Could go back there again, or higher.
     
  3. jys78

    jys78

    It will be path dependent subject to slippage and many other factors. Anyone trading these leveraged ETFs should be sure they understand their intricacies.
     
    samuel11 and cdcaveman like this.
  4. On a "day-to-day" trading basis, sure. But none of that is a worry if you make a big position play and get it right. The "intracacies" and "costs" of a leveraged fund will reduce the net leverage effect, of course. But the overall trend play will be a big success if caught.
     
  5. DaveV

    DaveV

    Unless you know what you are doing stay away from 2x and 3x leveraged funds. They are not designed for long term investments. See my post in https://www.elitetrader.com/et/threads/leveraged-etfs-on-dow-s-p.316926/#post-4581766

    If you believe that the S&P will crash in the next year, what you want can be accomplished by buying a deep in the money put, with a lot less risk than a leveraged fund.
     
  6. That's what "they" tell you... but check this out

    QQQ vs T QQQ.PNG

    Completely refutes the notion that "leveraged ETFs/Mutual Funds are never for long term trading/investing".

    IOW... while leverage is a killer when it goes against you, it's GREAT when in your favor!
     
    Last edited: Jan 23, 2018
  7. SPX : 2835 -> 2800 means -29.5% in one day
    SPXU: 9.50 -> 17.91 (+29.5%x3)
     
  8. Thanks but I am not looking at flash crash scenario. Just a bear market from 2018 to 2020 or something like that, to hedge 401k.
     
  9. That's simple.

    Take a 1/3 position in SPXU vs the value of your 401k. If successful (market decline), your hedge will likely make more than the losses in the 401k. Vice versa if the market keeps going up while your hedge is on.
     
  10. DaveV

    DaveV

    Sure. If the buyer was willing to hold on to the leveraged ETF for the multiple times when the chart indicates that the drawdown was more than 50%.
     
    #10     Jan 23, 2018