QQQS - Inverse daily NASDAQ-100

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1

Hello folks,

I have been checking QQQS more and more recently, with Nasdaq breaking records each week.

However I found something interesting, maybe someone has better knowledge to explain.

Now the official page claims:

WisdomTree NASDAQ 100® 3x Daily Short is a fully collateralised, UCITS eligible Exchange-Traded Product. The ETP tracks the NASDAQ-100® 3x Inverse Total Return index, providing three times the inverse daily performance of the NASDAQ-100 TR index, adjusted to reflect fees as well as the costs and revenues inherent to shorting stocks.

https://www.wisdomtree.eu/en-gb/etps/equities/wisdomtree-nasdaq-100-3x-daily-short#

Now if I understood correctly I should check Nasdaq 100 Total return index and x3 to get the result for the QQQS - inverse daily 3x.

So I went SA to check TR index.

Screenshot_20200807-172343_Seeking Alpha
Screenshot_20200807-172343_Seeking Alpha1080×2280 268 KB

It shows negative returns, so one should expect inverse to have positive, however surprising.

Screenshot_20200807-172435_Trading 212
Screenshot_20200807-172435_Trading 2121080×2280 260 KB

Inverse is also negative and almost 3%…

So what am I missing here? :thinking: I understand that QQQS is LSE listed, so it is open on UK market time, so how does QQQS track movement of NASDAQ-100 TR then?

2

I think it may be that as the USD has appreciated alot today, the Nasdaq returs in EUR or GBP today is positive, hence the inverse is negative.

The USD is up 0.78% against the GBP and 0.82% against the EUR.

3

@Vedran Don’t look at it exactly 1:1. One trades at 08:00 <-> 16:30 UK time, the other 14:30 <-> 21:00.

Today, when the QQQS opens, it’ll account for the price movement that happened after it closed yesterday -> 16:30 <-> 21:00.

1 Like
4

It’s best to think of the “NASDAQ-100” as a product that trades both throughout LSE trading hours and US trading hours. It’s just that most of the volume comes during US trading hours.

Market makers are making prices in the morning (during US premarket, coinciding with LSE trading hours) and even after US markets close (aftermarket trading). Hence, when both LSE and US markets are open, they should move in unison. When LSE is closed and trading goes on in the US, any changes (including overnight news releases) are reflected in the LSE listed product the next day.

Keep in mind that the market makers are usually hedging their holdings in these products using futures products, which trade 24 hours a day.

Over time, you should see that both products do, in fact, move together - despite the trading time differences.

Hope this helps :slight_smile: