Srs

Can somebody elaborate on SRS, please.
I understand that is ultra short DJ Real Estate Index(?) and involves futures(?).
I do not understand why makes 20%+ moves when no index moves more than 2-3%.

Agras

 

It depends on the companies in the ETF, right?

There was an announcement today of a company resolving some issue, so the sector as a whole took off after yesterday's big selloff. And since it's a 2x ETF, the move is amplified.

 

^ that's probably correct, GGP was up 30%. check SRS's holdings, I bet they are short a lot of GGP

 

Good thought.
However, both GGP and SRS opened at their high of the day and traded lower.
There should be some other reason(s).

Agras

 

srs is a proshares ultra short 2x leveraged etf the stupidest product to destroy wealth created in recent memory except for the new 3x leveraged etfs of course lol The etf is marked to market daily so if you buy it and it goes down 5% the first day you are down 10% on your original investment. If it drops 5% the next day you are down to 81 on a cost basis of 100 requiring it to go up 12% the next day to get you back to break even. Course it can work in your favor if you pick the perfect time to buy it but you lose in the long run to crazy high dividend yields and large management fees. You are better off shorting iyr in a margin account at least you know what you are paying in terms of margin interest and ex-dividend payouts

 

ETF's are trading vehicles, they have done wonders for me and other traders. I would not, nor do I think anyone else would,ever argue that someone should hold on to an ETF long term.

 

course you can do what you want with any trading vehicle, plenty of people use etf's for long term investments even inverse short ones. Personally i don't think the inverse leveraged funds are very good trading vehicles but to each his own.

 

What is considered a long trade with SRS?

 

This isn't a cookie cutter world and what's obvious is generally not correct. One answer would be re-balancing. Another would be staggered maturities of instruments. Another answer would be the human element, namely the AMEX specialist that makes a market in SRS.

The short answer, it's shot its wad. Chart attached.

You'd be better off shorting inividual REIT's. In particular with 90%+ institutional ownership, enough daily volume, low ROE high Debt to worth. Unfortunately vacancy rates are easily discerned.