Leveraged ETN

[false_Aest]

Someone familiar with this stuff (e.g. $UWT) care to give a dummy like me a quick overview of the ins/outs + pros/cons?

I have a friend who's been talking this thing up for a few years but it's totally outside my understanding. Since I became aware of it I've seen it hit $40+ and now it's at it's lowest point . . . EVER. Makes me interested.

There's a part of me that just wants to spend $50 and see what happens over the next year.

[CNY rider]

Honestly if you have to ask.....it's not for you.

[Ralph]

Honestly if you have to ask.....it's not for you.

This....and you can usually get a free drink in Vegas. I don't do 3X ETN's, ETF's, or anything. Regular stocks volatile enough for me.

[kppolich]

Someone familiar with this stuff (e.g. $UWT) care to give a dummy like me a quick overview of the ins/outs + pros/cons?

I have a friend who's been talking this thing up for a few years but it's totally outside my understanding. Since I became aware of it I've seen it hit $40+ and now it's at it's lowest point . . . EVER. Makes me interested.

There's a part of me that just wants to spend $50 and see what happens over the next year.

3x or any leveraged product isn't meant for long term holding. Maybe a day, 2, or 3. Get in and get out, not for the faint of heart and definitely not getting advice from a cycling forum.

https://seekingalpha.com/article/4107640-playing-fire-how-long-can-you-safely-hold-3x-leveraged-etf

[CNY rider]

Bill Fleckenstein had this in his column today about a similar ticker:


A reader asked about TBF as a way to play short bonds. Just a warning, that is an 'inverse' fund (-1x), and as-such it has a similar fundamental dynamic to 2x and 3x funds. It has to rebalance daily to maintain its -1x exposure, by shorting more on days when the underlying is down, and buying on days when it is up. This works fine when the underlying is trending, but it gets chopped up if the market action is reversing/whipsawing. Bonds could go up and down, and end up flat, after a period of days or weeks, and you would lose on TBF. (It's obviously not as strong a chopping up effect as with a 3x fund, but it is still there; the 2x and 3x funds also have to rebalance daily by buying on up days and selling on down days.)

On the other hand, if bonds just move straight-line down day-after-day, you would make more on TBF than on just shorting a fixed number of t-bond futures. TBF would then be basically constantly topping up your short size all the way down. (E.g, if you short $100K of t-bond futures, and it goes down 10%, you are now short $90K with a $10K profit. In contrast, $100K invested in TBF would be *up* 10% (now worth $110K) and they would rebalance on the close to be short $110K of bonds. That's 'great' if bonds are down again the next day; and 'not great' if they reverse the next day.)

[prototoast]

https://www.bloomberg.com/news/articles/2020-03-10/two-leveraged-oil-products-to-shut-down-in-wake-of-epic-crash

Just a reminder that these products are very risky.