Hi @SiLowe. Please keep in mind that these are daily leveraged ETPs. This means that longer holding periods can lead to some whacky performance if there’s no trend - due to what’s called the compounding effect.
I’ve been away last few weeks, but will be glad to share the new list once the ETPs are available for trading on the platform. I’ve asked the T212 team to add them today, so they should be live in the next few days.
Sure. As usual, the new ETPs all track existing instruments - just with leverage or short exposure.
Leveraged ETPs: We buy the underlying instruments to make sure the leveraged exposure is fully backed. Example: For $1M worth of 3x NIO ETP issued, LS (Leverage Shares) buys $3M worth of NIO stock to be held as collateral. The added financing for the purchase of the underlying instruments (margin loan) is provided by IBKR.
Inverse ETPs: LS simply shorts the underlying instrument(s) and holds cash as collateral. Pretty simple. No swaps, no derivatives, no futures contracts.
Hi @sedah - COIN stock gapped up >33.33% at US open on the 4th of August, rendering -3x Short Coinbase ETP worthless. You’re right - there is a mechanism to curtail the chances of the product going to 0 - unfortunately the stop-loss mechanism cannot be triggered outside of ETP trading hours.
The ETP will be delisted in the upcoming week(s) and investors will be compensated with approximately $0.10 per ETP held (minimum redemption amount). There will be an official notice published on the site of London Stock Exchange shortly.
Not being rude here, but you understand what you’ve bought right? You need the price to go down, if the price spikes upwards in a volatile manner ALL of the derivatives within that ETP become essentially worthless, when something becomes worthless it can no longer trade and thus is delisted. It’s like an ETP form of bankruptcy.
My question is about Leverage Shares 5x Long US Tech 100 - QQQ5.
Yesterday, I bought shares at 16:51 EET at price $0.249, and sold 45 minutes later, 17:37 EET at $0.191.
That’s a 23% change! How could it be, as the index has not moved 4.6% in the time span?
Trading 212 couldn’t answer, Leverage Shares told me “We work with an independent market maker, which is setting the quotes for our products and is responsible for the intraday pricing.”
I really can’t figure out how could you lose such a great amount for such a short time, as US Tech 100 didn’t change even 1% in the period.
I attach screenshots, would be really grateful if someone could explain!
Not a definite answer here, but maybe some pointers.
For one, this is indeed an extremely volatile product, although as you’ve pointed out, the underlying movement hasn’t been that extreme.
Secondly, these products are assisted by a sponsoring bank, acting as a Market Maker; in order to insure that the product trades around its supposed underlying NAV, the MM has standing orders on the trading book a little above and a little below the NAV.
But the range between these orders is rather wide, in part to allow genuine trades between people in a rather illiquid market, and in part for risk management on the part of the MM.
What I believe happened, you’ve bought the instrument with a Market order, and got the MM’s selling price (above the NAV). Then sold with a Market order, and also got the MM’s price (below NAV).
(Edit: Yes, i use the term NAV very loosely here. Of course talking about the reference index.)
Thanks for the reply! I got historic data on QQQ5 and there are no prices reaching fill price of 0.249. Could you please explain me how is that possible?
In the transaction details, you will notice it reads “Over the Counter (OTC)”.
This means T212 was your counter party, the order never reached the exchange; and was filled at the closest trading book order (you got the price you would have gotten on the exchange, but your counter party was T212).
T212 keeps a buffer of shares to honor most of the trades internally, which they fill at the exchange’s prices, to avoid paying commission on posting these orders. This is pretty much the only way they can afford commission free trading.
If you issue big orders, especially on unpopular products, you may see your order being split in 2; a first one, OTC, honored by T212. Then the 2nd one would be executed on the exchange.
Not entirely sure about Limit orders; I’ve heard some complaints around here that T212 does not post it on the exchange until it reaches close to the limit price; if it were the case, they also could internalize the transaction as well.
Why has the LEVERAGE SHARES -5X SHORT NASDAQ 100 ETP SECURITIES not moved in 2 hours despite a clear drop in the market! This is not right and not fair!