What are Leverage Shares ETPs?

What are they? :books:
These are Exchange Traded Products (ETP) on the most popular US equities like Apple, Tesla, Amazon, Facebook, Microsoft and others.

How do they work? :man_shrugging:
For example, if the underlying stock increases by 2% on a given day, the:

  • 2x ETP will aim to increase by 4%
  • 3x ETP by 6% (and vice versa).

The -1x ETP seeks to provide short exposure. Hence, if the underlying drops by 2% on a given day, the:

  • -1x ETP will aim to increase by 2%.

Should I consider using them? :raising_hand_woman:

  • SIPP/ISA eligible
  • Tradable in USD, EUR, and GBx
  • More exposure using less capital
  • Leveraged / short exposure in a simple trade
  • Guaranteed liquidity up to $10mn - BNP Paribas is dedicated market maker
  • No credit risk. The ETPs are physically backed: issuer purchases the underlying stocks directly

What are some possible trading strategies? :airplane:

  • Hedging existing exposures (using -1x ETPs)
  • Capitalizing on volatility of stocks (using 2x or 3x ETPs)
  • Capturing longer term momentum (using -1x, 2x or 3x ETPs)
  • Reacting to earnings releases (using -1x, 2x or 3x ETPs)
  • Many others
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When do these become fractional?
Please let us know if these shares have a tentative date to become fractional?

Thank you in advance.

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Hi @vvsvin,

This depends on the internal risk parameters of T212 and I’m not sure if there is a tentative date in place.

Maybe @David can provide some insight?

Regards,
Oktay

Anybody play the stock splits? In hindsight (20:20), this was so obvious.
Today post stock split…

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These could’ve gone either way but up would have been my bet. But that’s betting…

@Oktay nice description but would it be a tactic for short term (day’s to weeks) or long-term?
It feels highly speculative.

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Hi @Spacebar,

You are right. These are meant for active traders and the recommended holding period is, as per the prospectus, one day.

However, it always depends on the investor. If you look back at the performance of many of the 2x / 3x ETPs going back a few months, you’d see that that they’ve performed quite impressively (e.g. 2x Tesla is +1000% since June 2020).

Other instances where some may hold them for the short to medium term:

  • The -1x ETPs could be used to hedge for the medium term of existing positions.
  • Instead of investing $200 in the underlying stock, some may choose to invest $100 and get twice the exposure using a 2x ETP (i.e. $200 worth).
  • Momentum strategies / swing trading strategies / reactions to news / etc.

In that sense, it may make sense for some to hold on for slightly longer - but they should always understand how the products work and monitor their positions on an intraday/daily basis.

Hope this helps :slight_smile:

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How long can you hold the shares, versus say a standard share?

He notes 1 day is recommended.

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Thanks, do they incur charges, or do the expire? Could these be held up to 5 years?

Hey @bizie,

They can be held for 5+ years, although the recommended holding period is 1 day.

The fees/costs are reflected in their price (0.75% management fee and a margin rate).

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As reference, have a look at how the 2x Amazon ETP (red) has performed vs. the Amazon stock (blue) over a 1-year period. Of course, this is not indicative of future results. :slight_smile:

They can be held for longer time frames, but the recommended holding period is 1 day.

Cheers… thanks for alll the info

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