Visitors Now:
Total Visits:
Total Stories:
Profile image
By Quantum Blog (Reporter)
Contributor profile | More stories
Story Views

Now:
Last Hour:
Last 24 Hours:
Total:

What if S&P 500 lost 50% on a single day?

Tuesday, October 25, 2016 6:24
% of readers think this story is Fact. Add your two cents.

(Before It's News)

Most of us know that there are leveraged ETFs, providing up to 3x daily exposure, in decimal percent. Usually these etfs  perform just as advertised, but imagine a situation where the index looses a very large portion (~50%). Such an event unlikely, but is not impossible if you think about the 'fat tails' and ~20% loss on black monday in 1987.
Now imagine you are unfortunate enough to own one of the 3X leveraged etfs on while S&P looses 50% of its value. will 3x exposure result in a 150% loss??? Ok, you probably will face a margin call before that, but I'm having a hard time trying to imagine what would happen to the leveraged etf price on such a day.
What do you think?

Report abuse

Comments

Your Comments
Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

Top Stories
Recent Stories

Register

Newsletter

Email this story
Email this story

If you really want to ban this commenter, please write down the reason:

If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.