why is faz so cheap? how bout eev?

Discussion in 'Trading' started by qwert, Mar 25, 2009.

  1. qwert


    any ideas of why faz is so cheap and what products are used to give it 3x the finance index.

    bought 100 of eev at46 bought 200 shares of eem at 23. eev is 2x the emerging market index but has gone down this week at rate of 4x of what the eem fund goes up. any ideas

    if you look at a 2yr or more chart of these 2,3x bear index funds and compare them to long etf on the same chart, you ll see they re both going down, so these bear ultra funds seem to be losing money some how.
  2. jjftw


    the funds you mentioned track inverse 3x and 2x of DAILY PERCENTAGE moves of russell 1000 financial index and emerging markets, they are daytrading instruments and should not be used for long term trades, at least not in a conventional way

    in a year or a few months its possible to have russell 1000 financial index equal or lower what it is today and have FAZ at a price of 1 dol. , depending on the intraday price moves of the indexes

    let me give you one crazy example, suppose russell1000 financial index tomorrow drops 99 %, that would tripple FAZ and make it for example worth 60, on the next day suppose the financial index goes up 30%, FAZ will have to go down 100% and basically 0, so you can have in 2 days financial index being down 98% and the instrument that went the 3x inverse of it also down 99 %, this is extreme example but you get the idea