ETF 3x and Its Decay

silicon_beaver

It's well-known that ETF 3x is consumptive. Many HT Laoda consider ETF 3x, a poison. suggest NOT play it. I am rethinking my playing.

Here I would take FAS and TNA as examples, compare them with SPX to show their decays.

Bear 3x FAZ, TZA... decay faster than the counterpart FAS, TNA.

By Friday 10/28/2011, SPX almost back to the level of three month ago (0% level change on 3-m chart). But, look at FAS, it's at 70% of its original level (22.94). A 30% loss.

In another word, if long FAS in last three months, even SPX no change (1285), but FAS lost 30% (22.94-->16's).
FAS will have a new split Nov 2011 (it keeps merging, otherwise, it decays to zero too soon).

Playing EXT 3x is fun. But obviously, ETF 3x is not good for long.
I am thinking to go back to individual stock, a better choice in long-term.

FAS vs. SPX 3m change


TNA vs. SPX 3m change

dsp

Thanks.

dbshjb

Fan8an

benbendan

天地

curiosity2009

Thanks

hunting

ruoli

spo

这轮下跌小股和银行股比spy要跌得深，这个比较是不是不太妥当？

TTwarrior

要比也要用finance的1X.有decay,但远没那么夸张. DT和short term ST用3X decay并不大。关键3X Swing 幅度大，不易操作。当然你要是对一段的趋势很有信心，上3X可保证较大收益。

silicon_beaver

spo 发表于 2011-10-30 07:14
这轮下跌小股和银行股比spy要跌得深，这个比较是不是不太妥当？

I used term "Decay examples" instead of "Decay rate" to avoid mis-understanding. Also, specifying the time frame "last three months, by 10/28/2011) .

The Decay rate will be much more complex. While my examples (FAS and TNA) are intuitive estimate and my conclusion is "ETF 3X is not good for long".

My ETF 3x 操作 is posted here.