|
OK, let me explain why all short ETFs eventually goes to “0”!
Sounds like many of you don’t even know what you are doing
here on buy and hold those short ETFs…
Back to basic, how you short a stock, if you don’t own that
stock?? You either buy puts or naked short stocks, buy puts is easy to
understand, all puts decays…
If you have 0 cash balance in your account, will they allow
you do naked short on stocks?? You need a margin account and enough cash to
open a short position… and the size of short position you can open is based on
the cash you have in account…
Cash has time value, 30 year mortgage has interest rate near
6.3% now, short term margin interest rate is about the same if you borrow cash
from your broker to hold a position.
So, those short ETFs are all losing cash interest day after
day… this is the first part of decay…
And those 2x, 3x short ETFs will lose 2x, 3x on interest,
the higher the leverage is, the more interest value it decays…
Another decay is comes from dividend pay out… every time
QQQQ pays a dividend, QID lose that part of value…just like if you short QQQQ,
and on that day if QQQQ paid a dividend, then your account will be deducted
that amount by holding QQQQ short position.
Same thing for OIH, and most OIH holding companies pay good dividend…
so, DUG is the opposite… it decays fast at a double speed…
Well, one really needs OIH crashes 10% to make some good
profit on DUG to compensate its decaying speed… if OIH continues it current
measured move… then DUG will sink at a 2.5x speed of the speed OIH moves up…
5/22/2008 2:54:05 PM :(13):
| 
狗仔卡
发表于 2008-5-21 07:16 PM
