01-02-2022, 03:09 PM
Doubt regarding Leveraged ETF calculation
<!-- SC_OFF --><div class="md"><p>Suppose if I were to buy a 3x ETF. The market drops 30% my ETF will drop 90%. Now if the market raises back to previous price that is let's say 40 %. My ETF which let's assume was 100 dropped to 10 ( because the market dropped) and now the market rose 40% so now ETF will raise from 10 to 22 right ? ( 10 to 22 because 40% raise is 120% raise in Leverage ETF). The question being if market falls 30% and raises 30% . My Leverage ETF will still be down about 80 odd % right. Am I missing something? Is my calculation wrong ?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Gammaconvex"> /u/Gammaconvex </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/rtpbgi/doubt_regarding_leveraged_etf_calculation/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/rtpbgi/doubt_regarding_leveraged_etf_calculation/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>Suppose if I were to buy a 3x ETF. The market drops 30% my ETF will drop 90%. Now if the market raises back to previous price that is let's say 40 %. My ETF which let's assume was 100 dropped to 10 ( because the market dropped) and now the market rose 40% so now ETF will raise from 10 to 22 right ? ( 10 to 22 because 40% raise is 120% raise in Leverage ETF). The question being if market falls 30% and raises 30% . My Leverage ETF will still be down about 80 odd % right. Am I missing something? Is my calculation wrong ?</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Gammaconvex"> /u/Gammaconvex </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/rtpbgi/doubt_regarding_leveraged_etf_calculation/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/rtpbgi/doubt_regarding_leveraged_etf_calculation/">[comments]</a></span>Kind Regards R