Discussion in 'Financial Futures' started by baller1069, Nov 23, 2008.
Any idea on what the value TBT would rise to if the yield on 30 years bonds rose to 6%?
?.......If bond futures fell from ~130 down to ~100, a ~6% yield, that would be a ~23% decline. You might expect TBT to rally twice as much?....46%.
I read the prospectus and TBT is supposed to track *daily* moves 2:1. In that case, wouldn't this compound daily? Thus (not too) different outcome. ie up 1% per day for 20 days is not =+20%. Instead = 1.01 ^20. (22%)
How do these ETFs actually work anyway? Does heavy buying or selling increase/decrease the fund's position? Is it all automatic intraday, or is there a manager who balances things daily? etc... Same question goes for all of these derivative ETFs (whether SPY, or ultras).
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