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re: Options Trading Thread

Posted on 5/22/24 at 4:01 pm to
Posted by frogtown
Member since Aug 2017
5067 posts
Posted on 5/22/24 at 4:01 pm to
quote:

Thank you for the response. Can I talk you into an example of what you are talking about.



Here is an example.

QQQ price on Dec 1/2021 was $398. SQQQ price $29.70.

Almost two years later.

QQQ price on Nov 1/2023 was $389. SQQQ price $16.02.

Pretty simple to understand.

Just take our advice and never hold a triple leveraged ETF long term.
This post was edited on 5/22/24 at 5:59 pm
Posted by LSUtoOmaha
Nashville
Member since Apr 2004
26589 posts
Posted on 5/24/24 at 3:54 pm to
Well, holding TQQQ long term is much much better than holding SQQQ long term. The issue with is ther TQQQ rebalances daily, and with 3x leverage, it has to borrow at 2x the Fed funds rate (roughly) to achieve its intention. During ZIRP that was fine, now it's like 10% in interest. That materiallly affects the risk reward profile of it.
This post was edited on 5/24/24 at 3:55 pm
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