Hey everyone,
Quick question…. I placed a pretty sizable position on SDOW this past Monday. I thought I understood the risks of the etf being 3x leveraged.
I met with a friend who is a portfolio manager, he warned me that these leveraged etfs have more risk than just simple leverage. In this case with an inverse etf, that if a stock say goes up 2% this one may go down more than the stated 3x. On the other side, let’s say the Dow goes down 3%, SDOW may not go up 9%( 3x). It may go up only slightly and in some cases go negative.
I started doing some research and seem to not find a definitive answer on how these work.
Could anyone shed some light how these truly work?I would like to stay in this position but if the odds are stacked then it may be better to just place a simple short or a put.
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- SR050321·2022-11-29I ever read 3x leveraged not for long term only for trading so must monitor closelyLikeReport
- Phillipsan·2022-11-22Agree, if dow jones fall -1%, then SDOW will gain 3x. Inverse re lationshipLikeReport
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