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. Havenāt used them as had no free funds and didnāt want to sell out of any of my positions to ride Appleās 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 thereās a indirect management/ongoing fees but thatās reflected in the market price you pay.
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Please make sure you understand how the leverage can lead to crazy volatility and decay. Donāt let your next question be āI donāt understand the price movements Iāve seen in my 3xAAPL in my portfolioā¦ā
Decay. Volatility. Risk.
Please google them beforehand folks.
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Appreciate the insight thanks!
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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.
Nice little video here too:
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, doesnāt catch me off guard while iām sleeping/working. so yeah, set a risk tolerance level that works for you.
Cheers! Iāll have a look at this
Yeah the volatility is pretty significant, I donāt think Iād 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 . 3xAPPLās one month performance is around 74.24% and the 2xAAPLās 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 itās 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.
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Yeah itās not for everyone for sure hahahaaa plus as soon as you enter thereās a fee
What fee are these ?
Thereās no fee for buying/selling or holding these Leveraged shares.
[quote=āsanty, post:14, topic:16842, full:trueā]
What fee are these ?
There is one of the guys up top posted how much it costs
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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 youāre adding more gains to a higher value, which was attained from previous dayās gains.
I can send a short example if you want to see how it works.
Regards,
Oktay
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Hey Oktay,
Thanks. Please send short examples, that will be very helpful.
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Sure.
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.
Regards,
Oktay
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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 theyāll 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, youāll 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 āhistoricalā charts in hindsight might give you the wrong sense of āomg i am going to be rich in no time feelingā
And āthe houseā 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.