Has anyone tried using the Apple 3x ETF or any other leveraged ETF on the platform? If so what sort of fees do you have to deal with and how often do they occur?
I have all of them in one dedicated watchlist. Haven’t used them as had no free funds and didn’t want to sell out of any of my positions to ride Apple’s short term momentum upward but in hindsight would have been a great play.
What you deal with directly is the typical buy-sell spread which you can see in app details:
Then like an ETF there’s a indirect management/ongoing fees but that’s reflected in the market price you pay.
Please make sure you understand how the leverage can lead to crazy volatility and decay. Don’t let your next question be ‘I don’t understand the price movements I’ve seen in my 3xAAPL in my portfolio…’
Decay. Volatility. Risk.
Please google them beforehand folks.
Appreciate the insight thanks!
This is kind of why I asked the questions first before even buying in first, to get a better understanding from people who have actually used it. Cheers.
i use the GBP one to iron out the FX movements but leave stops on the downside to make sure what these guys mention above, doesn’t catch me off guard while i’m sleeping/working. so yeah, set a risk tolerance level that works for you.
Cheers! I’ll have a look at this
Yeah the volatility is pretty significant, I don’t think I’d use it long term but it has real benefits used correctly. Thanks for your input!
Does anyone know, why one month performance of 3xAPPL is less than 2xAPPL . 3xAPPL’s one month performance is around 74.24% and the 2xAAPL’s one month performance is 76.72%.
I would expect performance of 3xAPPL to be 1x more than 2xAPPL performance over comparison of one month period ?
Mine got sold today as it hit my stop too volatile buddy
I assume it’s because the price swing are much bigger on the 3x compared to the 2x and the leverage is set daily which leads to decay over time. This video helps to explain it better.
Yeah it’s not for everyone for sure hahahaaa plus as soon as you enter there’s a fee
What fee are these ?
There’s no fee for buying/selling or holding these Leveraged shares.
[quote=“santy, post:14, topic:16842, full:true”]
What fee are these ?
There is one of the guys up top posted how much it costs
The fees are built into the price that you see on your screen, which amount to about 0.00479% per day (quite insignificant).
As you can see, these products have performed really well given the boom in US tech stocks lately. The thing to keep in mind is that these products perform best in trending markets, because every day the gain is compounded.
Essentially this means that you’re adding more gains to a higher value, which was attained from previous day’s gains.
I can send a short example if you want to see how it works.
Thanks. Please send short examples, that will be very helpful.
Here are two hypothetical examples for a 2x Leveraged ETP. The first screenshot has two tables. The first shows what happens when the underlying increases by 5% every day. As you can see, over time the performance is better than what the investor might expect.
The second shows what happens when the underlying drops by 5% every day.
This next screenshot assumes that the underlying repeatedly increases by 5%, then decreases by 5% the next day.
Thanks Oktay. Good examples to understand how leveraged ETP works.
Is there any table showing comparison of historic one/two year performance of all leveraged shares against the actual share performance?
I am sorry these tables and pseudo ratios are grossly misleading and I think that is intentional.
If stock A gets 1% a day 2X leveraged A does not automagically get 2%.
when you buy A for $100 you pay $100 and get a single share, if the value of the share is $101 tomorrow, you can sell and get 1%
when you buy 2xA leveraged for $100, you pay $100, the ETC borrows $100 from MMF buys 2 shares. keeps them until close, sells them, if the price is $101 they’ll get $202, pay back the loan -$100, pay back the interest on $100, however much that is. charge their daily fee (apparently 1% of margin according to above post) and charge the annual fee. If you now sell that 2x share, you’ll get 101.xxxx.
The moral of the story is unless you expect the share you buy gaining a lot every day, leveraged ETFs are not advantageous. Again looking at those “historical” charts in hindsight might give you the wrong sense of “omg i am going to be rich in no time feeling”
And “the house” always wins (used to be the casino, these days fund managers apparently) This time they win so much its ridiculous how they convince people it is a good idea to buy these.