http://www.direxioninvestments.com/etf-faq#5 Q. What happens if the value of the index that a Direxion ETF is tracking moves more than 33% in one day? "Direxion Shares reserves the right to be responsive to index movements up to, but not beyond, a certain point. For example, if a Bull Fund’s target index gained 25%, the Fund would be expected to gain 75%. However, if the target index gained 30%, the Fund’s portfolio might not respond to the index gains which result in the difference between the 25% daily movement from 25% to 30%—meaning the Fund’s return would be capped for the day at 75%" .
%% Good points m22; + if memory serve me right + usually does, they[Direxion] has >>777+ pages prospectus/ annual report covering plenty of risk. Including but not limited to ,op question; lot of cool charts in there also................................................................
%% Also some have it in the prospectus..... You may think the closing price is 3:00 CST or something like that.Actually I'm thinking on one ETF that gives the manager [ in writing ]more discretion on his closing price than you or me ever thought.
The actual instrument they use is a swap to get those gains/losses tracked. Most of them have daily collateral calls so my question is what happens to you when you've got a margin call and not enough funds? That's your answer.
That sounds right Good points. And since the Direxion line after that, mentions the'' protection of the share holders'' Its not going to zero....... since the profit ''would be capped @75%.''
I dont think there was a day with vix future raise over 80% in a day yet, so 2008 or 1987 crash is not enough.