Leveraged ETFs Explained (Stock Market for Beginners)

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Күн бұрын

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In the world of investing, ETFs are used by investors to gain access to portfolios of securities they could not otherwise afford. Stock index ETFs allow investors to gain exposure to broad baskets of stocks.
But there are more exotic ETFs, called "leveraged" ETFs. These ETFs lure investors into believing they can amplify their returns over time, but that's not necessarily the case.
There are pitfalls when investing in leveraged ETFs that you should know about before making any trades in them, as they behave differently from the benchmarks/indices they track.
While leveraged ETFs can deliver outsized returns in the short-term, they are not meant to be held as long-term investments.
In this video, we will cover what leveraged ETFs are, and go through examples comparing their performance relative to the benchmarks they track.
Video Timestamps
0:00 - Introduction
0:36 - What is an Exchange-Traded Fund (ETF)
2:24 - What is a Leveraged ETF?
5:36 - Example #1 (TQQQ vs. QQQ)
8:30 - Example #2 (SPXL vs. SPX)
10:16 - Why Leveraged ETF Returns Vary vs. the Underlying Index
I focused mainly on the pitfalls of leveraged ETFs in this video, but I should mention that they can be used powerfully IF the direction is predicted correctly. Of course, it's impossible to consistently predict short-term stock market movements, which makes leveraged ETFs very risky vehicles to use. But for those looking for short-term leverage, they can be great short-term products to use.
I will do a video covering the benefits of using leveraged ETFs in the near future!
Please leave a comment below this video if you have any questions, or if you'd like to add some of your own. As always, I'd love to hear from you/chat with you.
==== Additional Videos & Resources ====
SPXL ETF Info: www.direxion.com/product/dail...
TQQQ ETF Info: www.proshares.com/funds/tqqq.... tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.

Пікірлер: 306

@projectfinance 11 ай бұрын

✅ New to options trading? Master the essential options trading concepts with the FREE Options Trading for Beginners PDF and email course: geni.us/options-trading-pdf

@projectfinance 3 жыл бұрын

People are commenting saying that these leveraged ETFs have blown away the underlying index ETFs over the past year. While that's true, keep in mind they lost 75%+ of their value in March of 2020. Are you comfortable investing in these products long-term and potentially losing 50%+ of your money in a bear market? The point of this video was to educate on the differences between standard ETFs and leveraged ETFs. A bullish leveraged ETF will do amazing in a relatively linear upward trend, but they will do incredibly poorly during bear market periods and even worse in severe market crashes. As long as you know the risks, do whatever you'd like to with your money! Keep in mind that there was an ETN called XIV, an inverse volatility product that made passive investors rich. Then, in 2018, XIV lost 95% of its value overnight and was ultimately terminated.

@GBM0311 3 жыл бұрын

33.3% down turn in a day for the underlying sends the 3× to 0

@projectfinance 3 жыл бұрын

@@GBM0311 That's correct! Fortunately, stock market activity gets halted when the index products fall various percentages throughout the day. A 20% decline would halt trading for the remainder of the day.

@juliobatista6186 3 жыл бұрын

I bought SPXL at $17 back in March, sitting on about 350% returns at the moment. Agree that these things are risky but there are also leveraged bearish etfs like SPXS that can serve as a cover especially when the market is spiraling downward as we were doing back in March.

@projectfinance 3 жыл бұрын

@@juliobatista6186 Very nice buy! The timing of entries in leveraged ETFs is crucial.

@ltzs1990 3 жыл бұрын

TQQQ has split very recently, the adjusted closing price for Feb 10, 2020 is $55.48. So TQQQ has doubled since then.

@cskurski00 3 жыл бұрын

Thank you for the videos you create and post. As a beginner, your videos are immensely helpful!

@theflamingsnowman8463 3 жыл бұрын

I invested in UCO at the beginning of covid when it was at $14 and it is now at $70

@danthemann6565 Жыл бұрын

Chris, thank you for your work. Excellent demonstration of the ETF world.

@lori5946 2 жыл бұрын

I bought in March 2020. I bought SOXL for $16 during the dip. It has gone as high as $80. Currently $68. I am still buy the dips. I am looking to hold for 10 years.

@c.white86 Жыл бұрын

This has not aged well. SOXL is sitting at $20.89 as of today

@fishstock2007 Жыл бұрын

@@c.white86 Currently $12.4

@karthikreddy90 Жыл бұрын

Went down to 10.53. Are u still buying dips?

@pragmatica1032 5 ай бұрын

34.80 now. Hope he did buy the dips and sold around 70

@lori5946 5 ай бұрын

@@pragmatica1032 No I didn't I was a fool. I really should have stuck with safe stuff. My favorite stock since 2010 was NVDA. I am holding it wish I bought more during the dip last year. I still have SOXL but lost money.

@franciscoportela1103 2 жыл бұрын

very well explained, thanks!

@ihateyourusernames 5 ай бұрын

Great video, thanks!

@masoudghafoer9229 2 жыл бұрын

What a great explanation!!! Thank you!

@onenant.4029 3 жыл бұрын

Thank you for this informative video. Will this works the same when I buy LEAPS option on the TQQQ Call?

@Faraz70 3 жыл бұрын

as of today all the 3x Leveraged etfs have outperformed their indexes by huge margins

@JusdoinstuF 3 жыл бұрын

exactly, so i dont understand why leveraged etfs are bad investments for the long term especially after a market crash.

@Oisinkelly308 3 жыл бұрын

@@JusdoinstuF after a market crash, you don’t know if you’re buying the dip or not. If it dips more you could lose a large amount. But, it could be a great investment on the way back up

@jesse_- 3 жыл бұрын

SOXL love it!!!

@Matthewuzarski 3 жыл бұрын

Seems to me that his example points out the opposite of what he is saying... they are better in long term than short term... but his point about the potential of losing massive amounts in short term is definitely valid

@Faraz70 3 жыл бұрын

@@Matthewuzarski what he and other youtubers are saying is right, but they all present the worst case scenario, you buy at top and market crashes to bear tertiary. wall street millennial made a good case for these leveraged etfs and did a 100 year study. if you invested in these leveraged etfs 100 years ago (dollar cost averaging), today you will end up with $13 million vs less than 500K if you had invested in sp500

@davidang8003 2 жыл бұрын

Never know Johnny sins is also a hedge fund manager …..

@abronxtale 2 жыл бұрын

Thank you sir for your valuable content

@trev777 2 жыл бұрын

Awesome video. Thank u.

@waynewhitworth4932 3 жыл бұрын

Wow, thank you so much. I've been using a triple DOW product since last year after the market crash and obviously have done fantastic. I had never heard of them before and just got lucky. Now I realize the down side. Awesome video!

@rushshotthatmedia8083 2 жыл бұрын

Thank you so much.

@borismartinez6475 3 жыл бұрын

Hello Chris, would you, please, let me know your opinion, or make a video, about selling ETF options, and pros and cons of trading stocks options vs ETF options?

@josephedmonds4765 Жыл бұрын

clear & concise, thank you very much!

@projectfinance Жыл бұрын

Thanks Joseph!

@adithepr 3 жыл бұрын

Thanks a lot.

@prej1741 4 ай бұрын

Thank you

@dantae666 3 жыл бұрын

your maths is wrong. 27.00+11%= 2997 so is still off of 3000 however the difference is still greater on the leveraged etf

@perfectpyles Жыл бұрын

Great stuff - exactly what I needed to know before potentially investing in one of these.

@rageoid 3 жыл бұрын

This almost exceeded the general clarity of Mike and his White Board, close call, both stellar ! Next video idea - Inverse ETF's ? Iron Condor through earnings ? Great topic on this one, thanks !

@mrsmith7741 Жыл бұрын

Great thanks

@fluffycomedian 3 жыл бұрын

Great vid

@piranishahid 2 жыл бұрын

You are amazing!!!

@uria702 3 жыл бұрын

If you bought tqqq the day before the crash of 2020, when it was at all time highs, you would be up 55% today. How do I know? I did it.

@RaghunandanReddyC 3 жыл бұрын

Why didn't you buy the dip though? I had SPXL, it crashed from ~70 to 25$, I bought the dip. It recovered pretty much. I didn't exactly understood the risks. I think I should get rid of atleast half of the shares I hold in it. And bring it below 10% of my portfolio.

@uria702 3 жыл бұрын

@@RaghunandanReddyC I did buy the dip, but I can see my profit % on each order so I’m referring to my buys from Feb 2020 when market was at 29k. I’m up 84% on those purchases today. My point is that even if you buy at the top and the market crashes, you will end up ahead in the long run. The idea that in a market crash you’ll lose everything and never recover is nonsense! Tecl, Tqqq, ubot and soxl for the win!

@joemq 3 жыл бұрын

@@uria702 have you seen Wall Street millennial’s video on leveraged etfs? This sounds like you are confirming what his premise.

@AfaanOromostock- 3 жыл бұрын

@@RaghunandanReddyC did you bought eft leap call options? Can you make a video about it

@AfaanOromostock- 3 жыл бұрын

@@uria702 can you make a video about ETF leap options Call please

@roseaweinberg 3 ай бұрын

What about purchasing Canadian EFT’s do you have any videos on this?

@Rsb2021 2 жыл бұрын

Good information

@natalie357 3 жыл бұрын

Hey chris this is all very new to me and id appreciate it if you answered this question. When trading options, when does the brokerage keep the money that you used to pay for the option. Ive been watching some of your videos and i saw that sometimes you'll mention subtracting the premium from profit and other times you keep it all plus the profit.

@projectoption5725 3 жыл бұрын

Availability is on Whàt$àp +1 .4 1. 5 2 9. 4-0 4 2 1....

@nath1774 3 жыл бұрын

I learned the hard way about holding leveraged ETF's many years ago, and only use them now selectively, and for short time periods or a day or two. What about buying long dated put options on these value destruction machines?

@AfaanOromostock- 3 жыл бұрын

For how long did you hold the ETF option calls

@ronie1337 Жыл бұрын

Very Good!

@nicholassmith6904 3 жыл бұрын

i love learnin like why wasn't i doin this before

@travis10466ny 3 жыл бұрын

i just came across the etf OOTO, how do i find the original etf that its tracking?

@AfaanOromostock- 3 жыл бұрын

What happen if you buy ETF leap using call options . Does it make sense to buy one Dippin the money just forget about it for the entire year. 🤔

@onlywangs69420 3 жыл бұрын

Excellent video as usual. Leveraged ETFs seem to be great for hedging or taking a short term position. It is sort of between an option and a stock. If I were to go long calls on SPY (for example), it wouldn't be terrible (not saying this would be wise either) to pick up some inverse ETFs just as a pseduo hedge.

@matthewfarrell317 Ай бұрын

Still cant find out about leveraged funds and distributions. I get the value goes all over the place, but in Australia we get franking credits, and i was looking at the new G200, which is a leveraged A200 fund.... if there is a bonus to distributions, it could be powerful.

@costakonti 2 жыл бұрын

hi do a video on a scenario, buy on the open of the first trading day of the year and sell on the last day of the trading year, you will find positive results!

@abdulmu6931 3 жыл бұрын

I researched this awhile ago, but the explanations I researched weren’t clear. Your explanation was concise and really shed light on this for me. You are an excellent teacher!

@fseifudd 3 жыл бұрын

So what about sdow? Can I buy it now since its so cheap. Will they appreciate when the market goes down ??

@mrwazo Жыл бұрын

I understand - so its only the price that is reflected that given day. Not the overall growth over a long-period of time.

@NeverMyRealName 3 жыл бұрын

You are so informative!

@timjcollins13 3 жыл бұрын

What if a stock says leveraged randomly?

@nrathod9306 3 жыл бұрын

Pitbull explains trading the best!

@johngutierrez2687 3 жыл бұрын

Do you think SSO would make a good buy and hold long term holding for a lazy portfolio? Maybe like 15%?

@nathanamos9945 3 жыл бұрын

I think an article written by ddnum concluded that a 2x leveraged etf on the S&P 500 was best. They backtracked to 1885. The 3x leveraged seemed to lose too much during the downturns. Just Google ddnum leveraged etfs, should be the first article.

@OwenVentures 10 ай бұрын

So.... when i started dabbling in stocks i knew nothing about inversed leverage stocks. I bought several. I'm WAAAAY in the hole with them now. Lol will i ever get my money back if they go back up? Will i have to pay huge fines if i sell at a loss? I don't know what to look up to find this out. And I've definitely learned my lesson! 😂 thank you for the clear explanation!

@rickweldon9752 3 жыл бұрын

Thanks for the explanation. Very informative. My question is for TZA. This is inverse etf. It is at an all time low. The market is at all time high. Odds are a major market correction or crash. Does this make since to buy TZA ? If so, how l Iong would be reasonable to hold?

@lovejitsinghh 3 жыл бұрын

I have same question and I am thinking to hold UVXY but not sure how long can I hold it.

@Wltrwllyngaeiou 3 жыл бұрын

If you expect a crash, I think it's probably better to pull out of equity instead of going into inverse etfs. Think very carefully before going long and short on the same asset class

@jeff7461 3 жыл бұрын

UCO is up past $70. Do you have any ETF strategy videos?

@chaitanyapaul869 Жыл бұрын

can i invest Long Term for TQQQ ? is it good or bad idea sir

@Heart4KidsNonProfit 2 жыл бұрын

Thank you for this knowledge. I was just doing the opposite.

@lovejitsinghh 3 жыл бұрын

what is long? How many days, weeks or months can long define? It would help make better decisions if you could clarify 'long period' means. Thanks

@projectfinance 3 жыл бұрын

Weeks/months. The leveraged bullish index ETFs have done great in the bull run over the past year, but these products are not designed to be held long-term. In the prospectuses of these products, it literally says they are designed for intraday trading, not passively holding.

@bi0lizard1 3 жыл бұрын

Can you buy LEAP puts against the SPY? Would that pay off if the market corrects?

@projectoption5725 3 жыл бұрын

Thanks for commenting, I will refer u to my trade analysts and accountant to make good income and digital assets

@projectoption5725 3 жыл бұрын

His availability is on Whàt$àp +1 .4 1. 5 2 9. 4-0 4 2 1....

@adampitula4913 2 жыл бұрын

The prices you used for these leveraged etfs is misleading, tqqq climbed nearly 92% from its all time high in feb 2020 to the time this video was made, just saying

@plutus205 2 жыл бұрын

Would Inverse Leveraged ETF's counter this?

@rs22mm 3 жыл бұрын

tqqq is up 83% since febuary peaks and 500% since march lows. They are risks, but if u held tqqq since jan 2012, you would be up 6600% vs qqq only being up 450%. Similarly, spy is up 200% since 2012 while spxl is up 1150%. The difference in daily vs longterm performance in a bull market can actually benefit you massively. Maybe don't put your entire portfolio in leveraged etfs, but holding a smaller amount longterm definitly can make sense.

@dividenddata9408 3 жыл бұрын

I will advise you invest with Manager Williams and earn huge like I do and he's currently handling my Portfolio earning 200% profit with his strategies and guideance you will achieve alot

@dividenddata9408 3 жыл бұрын

W ha Sapp + 1 7 1 9 4 2 6 5 2 4 8.

@RaghunandanReddyC 3 жыл бұрын

I did the same. I bought the dip after corona crash. Should I have understood them better. So, general idea being, S&P usually goes up and isn't as volatile as other stocks. So, there is a good chance if S&P doesn't crash on you in one day, most of its value will return, probably slower than the index itself. Just hope S&P doesn't plateau after the crash, or continue to decrease.

@Mv3Trader 3 жыл бұрын

Great info!

@theempire1233 2 жыл бұрын

How does a leveraged ETF make 3x earning over the underlying Index? Do they make a bunch of long calls?

@alanfletcherfanclub 2 жыл бұрын

Woah. I've been investing and learning for over a year now. How am I just finding out about these risks?! Great video.

@psulionz87 Жыл бұрын

cause you've just been doing it for a year .... and probably just using KZfaq "University"

@sharkattack6423 2 жыл бұрын

Liiiiight Buuuuulb! makes sense. But if you bought in the dip to lower your price average it would make up for any losses?🤔 at least it would decrease the losses if you stick to your original example?

@projectfinance 2 жыл бұрын

Yes if you buy into a bullish leveraged ETF at the bottom of a market then you can do extremely well.

@eduardzel2427 3 жыл бұрын

Good explanation... simple and clear

@TheShade247 3 жыл бұрын

Great explanation

@emacro65 4 ай бұрын

I think the example that you cite for buying the spy or qqqq at feb 2020 is flawed... One should hone their skill to use these 3X leveraged etfs off a chart pattern at the bottom of the markets. Learn price action is the way to improve one's investing journey...

@mchaitanya331 3 жыл бұрын

When was this recorded? Spxl is at 77 now. On a 5 year chart spy increased by 100% as of 2/7/21 and spxl went up by 300%. Seems to me in a long term spxl is still better.. would you please help me understand why you think it's not good long term?

@projectfinance 3 жыл бұрын

A long time ago. Leveraged bullish ETFs such as SPXL or TQQQ will do amazing if the underlying indices have a big upward trend without many big drawdowns. However, if you look back to March of 2020, TQQQ went from $60 to $15, which is a 75% decline. If you're comfortable with losing that or more during a big market crash, then that's all that matters. I made this video to inform people of the risks associated with investing long-term in a leveraged ETF. If you look at the official informational pages for these leveraged ETFs, the issuing companies themselves state that these products are not designed for long-term holding. They are designed for short-term trading. Hold them long-term at your own risk.

@mchaitanya331 3 жыл бұрын

@@projectfinance got it thanks. So they'll do well overall in an extended bull market. Since we've been in one for a while now these ETFs will do well. Depends on the investment horizon potentially..

@projectfinance 3 жыл бұрын

@@mchaitanya331 Yes exactly. They do their job and perform well if the underlying index increases, especially a prolonged bull period as you've mentioned. The key here is to inform viewers of what can go wrong so there are no surprises.

@blissrunner 3 жыл бұрын

@@projectfinance The recovery for SPXL or TQQQ is pretty great honestly... even though it lost 60-75% it recovered in 1 year or 6 months respectively.

@ambrosepereziii6460 2 жыл бұрын

Fast forward to today and your making money if your still holding the fact that some of these leverage etfs pay dividends is where your wrong .

@projectfinance 2 жыл бұрын

Ok, invest in leveraged ETFs then. Your choice.

@sidkaskey 2 жыл бұрын

What could. possibly go wrong?

@TheJoeMoneyShow 3 жыл бұрын

How about 2X etf

@jermunitz3020 5 сағат бұрын

This video is a very black and white take on LETFs. Holding 100% of your portfolio in a 3x LETF is quite risky generally speaking unless there has been a dip. However having just 25% of your portfolio in a 3x LETF, the rest in SPY and rebalancing it yearly will maintain a roughly 1.5x leverage. This will likely outperform both the 3x LETF and the SPY because the rebalancing means you’ll sell the LETF when it’s high and buy when it’s low.

@RicardoHernandez-zr1pw 2 жыл бұрын

But why do they have options with strike dates if they’re not meant to be held? I trade their options along and I hold them for weeks sometimes.

@projectfinance 2 жыл бұрын

You CAN hold the shares and trade the options as longer-term plays, but these leveraged ETFs are not designed for longer-term holds. It says so in the fund prospectus (the document that outlines what the fund objective is and the risks associated with buying the fund).

@RicardoHernandez-zr1pw 2 жыл бұрын

@@projectfinance I have read it. But, these are the best performing options plays for me. I probably would have done great holding my TQQQ shares since they were under $100 a few months ago. I wheel these leveraged ETFs. Mostly TQQQ, TNA, & UPRO.

@projectfinance 2 жыл бұрын

@@RicardoHernandez-zr1pw Awesome! As long as you understand the risks then you should be fine trading them. Just know that they will only perform well when there is a consistent trend in the index. If the underlying index collapses, these leveraged ETFs will get decimated.

@mcninjatoes 2 жыл бұрын

why did you put a inverted red picture of yourself at 1:36?

@projectfinance 2 жыл бұрын

glitch

@sethzimmerman6114 3 жыл бұрын

Why not short the etfs if they underperformed the regular ones??

@sam.0021 3 жыл бұрын

they still trend upwards with the normal market

@user-ef6fg4qm8x 3 жыл бұрын

Why you start with -10 why not +10?

@insertfakenamehere7771 3 жыл бұрын

This almost seems like a direct response to a recent stockmoe video. I would be very interested in a video detailing strategies and examples for the correct usage of leveraged ETF's.

@dinkela 3 жыл бұрын

Stock Moe is only making NIO videos. He's only interested in the patreon members he gets for 10$/mnth

@insertfakenamehere7771 3 жыл бұрын

@@dinkela He released a video about getting rich off leveraged etf's. Now, maybe that is just code for NIO, but upon viewing, it actually appeared to be about leveraged etf's.

@dinkela 3 жыл бұрын

@@insertfakenamehere7771 look at Stock Moe's videos...9 out of 10 are NIO based. I was a fan of stock moe but at some point he got away from making good videos.

@insertfakenamehere7771 3 жыл бұрын

@@dinkela Ok. Be that as it may. Similarly, 2 out of your 2 posts in this thread about leveraged etf's are also NIO related. Coincidence? Maybe. Jokes, btw, so don't get mad. I got lucky with TVIX during the crash, but since then could not replicate those gains. This video helped me understand why. I am just looking for an explanation of how to use these instruments properly. My feeling now is that they are just for hedging.

@dinkela 3 жыл бұрын

@@insertfakenamehere7771 I'm not mad. No worries mate 👍.

@stijndeblauwe7607 2 жыл бұрын

You prefer LEAPS over leveraged ETF's for a 1-2 years investment period ?

@Jables2317 2 жыл бұрын

All about timing

@projectfinance 2 жыл бұрын

This is true!

@mr.wrongthink.1325 2 жыл бұрын

I have a question: Could a leveraged ETF fall to zero? For example if QQQ falls 35% in one day, will the 3x TQQQ fall all the way to 0?

@projectfinance 2 жыл бұрын

Yes, precisely. The leveraged ETFs track a multiple of the daily % change. So a 3x leveraged ETF would fall 99% if the index fell 33% in one day. There are stock market limits to prevent catastrophic, single-day losses, but it can still happen over a number of days. That was the point I was trying to make in this video.

@tanzyakhtar1124 2 жыл бұрын

Its really for true beginner.. if you know little bit of stock market mechanics, you will waste your time..

@rohang3895 3 жыл бұрын

What would you recommend be the best time-frames for supply and demand trading? Is it possible on lower time frames such as the 5 minute?

@rohang3895 3 жыл бұрын

@Liam Hogan Thank you very much, i will see if that works fine

@rohang3895 3 жыл бұрын

Thanks for taking the time to reply to my inquiry. I have been options scalp trading over the past few months, but have run into some obstacles along the way which have hindered my profits. Do you do 1 on 1 sessions or mentoring by any chance? Please let me know and thanks in advance

@rohang3895 3 жыл бұрын

@Liam Hogan This is amazing to know and some charge higher. Please I will be glad if you can give me further information about him because I will be happy to work with him

@rohang3895 3 жыл бұрын

@Liam Hogan I am very grateful and I just found his page now I will get in touch ASAP

@jasonfoster9118 3 жыл бұрын

I'm sure this is a ridiculous question but I'm new to options and am curious, if I sell a deep in the money covered call with a weekly expiration date and the stock trades sideways for the week and the options expires worthless do I get to keep the premium? I'm sure there's a reason why I won't be able to walk away with the huge premium. Thanks

@geoffmelnick1472 3 жыл бұрын

If the option is deep in the money when you sell it and the stock trades sideways, the option is still deep in the money when it expires. The purchaser will exercise the option, but you have the stock. He gives you the strike price, which is less than you would have got had you sold the shares in the market. If your premium was P, the strike price was X, and the current price is X + d, you end up with X + P, and the purchaser ends up with shares worth X + d. If P>d you have a profit, otherwise you have a loss.

@jasonfoster9118 3 жыл бұрын

@@geoffmelnick1472 Thanks, that makes perfect sense.

@kookies9584 2 жыл бұрын

@@geoffmelnick1472 what do the letters represent in you example?

@katiehalem1577 2 жыл бұрын

WHY is it triple tho? Like who makes this decision and why?

@projectfinance 2 жыл бұрын

They can make any leveraged product they want. There are also -1x and 2x leveraged products.

@bhawks 3 жыл бұрын

Chris.... You gave 2 examples of 3x bullish etfs..... Would the inverse occur with 3x bearish ETFs? Meaning instead of "drag" would it gain more value by capturing the drag?

@dividenddata9408 3 жыл бұрын

I will advise you invest with Manager Williams and earn huge like I do and he's currently handling my Portfolio earning 200% profit with his strategies and guideance you will achieve alot

@dividenddata9408 3 жыл бұрын

W ha Sapp + 1 7 1 9 4 2 6 5 2 4 8.

@mrc144 3 жыл бұрын

Typically, how quickly do you respond to emails? Is it better to comment on your videos or send a direct email. Thanks and great video!!!

@projectfinance 3 жыл бұрын

Depends. If the email is short I will answer quickly. If the email is longer, it may take me weeks of putting it off before responding. Thanks for watching!

@mrc144 3 жыл бұрын

@@projectfinance Whoa, now that was a quick response!!!I did send you an email and its quite short ;)

@feiyazsair959 3 жыл бұрын

Thank you Chris, amazing video.

@SynestheticAsylum 3 жыл бұрын

what’s up with the flashing red at times? That kinda took me out of the video early on. The explanation was great though 👍

@projectfinance 3 жыл бұрын

Yeah I think it was some glitch when exporting the video. I made this video a while ago and had it on my other channel so I can't fix the issue for this video.

@SynestheticAsylum 3 жыл бұрын

@@projectfinance I just finished the video and edited my comment to mention that the explanation was great. And the flashes were only at the beginning so it wasn’t as distracting as I thought it would be. Thanks!

@alchemist889 3 жыл бұрын

I think he may be possessed.

@conner1715 3 жыл бұрын

kinda hard to argue the leveraged etfs are worse in the long run...just got on TQQQ for my fist anecdote, nevertheless it is up 5300% in the past 10 years compared to the 560% return of QQQ...so tell me again how 560% is better than 5300% in the long run?

@jamesharris3109 3 жыл бұрын

Great content CB! Thanks again

@dubbdanofficial 3 жыл бұрын

Are we going to just act like that’s creepy flipped red screen of you’re bust at 1:36 didn’t happen?

@projectfinance 3 жыл бұрын

Big rendering glitch indeed 😵

@Wilsonandcars 3 жыл бұрын

Tqqq split that’s why it’s back to 109

@Wilsonandcars 3 жыл бұрын

Because TQQQ hit 200.00 then split to 100.00 so you doubled your shares. So I’m fact you have made more money with TQQQ

@projectfinance 3 жыл бұрын

Yeah you will make more money with a leveraged ETF than the underlying ETF if you catch a big trend. The point is, they are technically not designed for buy and hold positions. They are trading vehicles. Invest at your own risk. The drawdowns in a 3x leveraged ETF can easily exceed 75%+ in a big market sell off.

@jimbigbutae3632 3 жыл бұрын

is it true that if you bought one share of $tqqq for 1$ in 2010 and sold it now ($130) you would have made 129$ profit per share? that is what the chart shows (yahoo finance). Not trying to give you are hard time, just a new trader trying to understand and trying to figure out how things work. love your videos and have learned a lot from you since starting out!

@ngchongsin2009 Жыл бұрын

I had read a few videos on TQQQ, where the biggest downside is when the QQQ goes down and up to the original value, TQQQ may still be below the original value. But the market had gone so much down that the downside is very limited. If that is the case, is that any consideration before going to TQQQ?

@maxkelter3561 3 жыл бұрын

That's excellent advice. I followed your reasoning.

@hims5461 3 жыл бұрын

Hello- I have a query: Saw that as observation that if one buys deep out of money puts with say one year expiration for example Tesla put of 24 with January 2022 expiration, then despite the fact stock goes up for 5% put goes down for 50% Also observed that some 23 puts with same expiration of Tesla goes up by 100% what is the logic or calculation here how deep out of money puts work when expiration is out to almost 12 months Please let me know your 💭 thoughts

@maintaintogrow 3 жыл бұрын

Ok so how long is short term? A week? A day? It looks like leveraged ETFs only make sense for day traders.

@brycedeeney343 3 жыл бұрын

Depends on the situation. Many day traders only do intraday. I know swing traders who will sit in SPY, TQQQ, etc for a few weeks during a large run up.

@maintaintogrow 3 жыл бұрын

@@brycedeeney343 interesting. I own an ETF with symbol REVS. It's a "weighted" ETF that uses market cap weights but it's a very similar concept. It resets daily as well. It tracks the Russell 1000. I'm up about 5% on it. I'm really keeping it because of the 23% dividend. Maybe this isn't such a good idea.

@brycedeeney343 3 жыл бұрын

In a sideways market, leveraged ETFs will lose value. In a bull market, they will provide incredible returns.

@maintaintogrow 3 жыл бұрын

@@brycedeeney343 Exactly. That's why I decided to do it. But even in a bullish market it seems you should not hold leveraged for more than a day at a time. Would you agree? Or is that still situational?

@brycedeeney343 3 жыл бұрын

@@maintaintogrow I disagree. If you’re confident the market is on fire, holding overnight is way better. The majority of the price movement happens Afterhours.

@Proud_Troll Жыл бұрын

I don't know bro, if I walk onto Robbinhood and I look at QQQ over the last five years then I see that it followed the general economy pretty closely, only difference is that when the economy grew, it grew way faster, and when the economy dropped, it dropped way faster. Why shouldn't I hold stock there indefinitely?

@projectfinance Жыл бұрын

You can, but you won’t own shares of any tangible company. You’ll own a speculative financial product whose performance depends entirely on the specific path QAA takes. Also QQQ is down 30% from the high and TQQQ is down 80%. So the question is do you want to risk seeing your portfolio drop 80%+ during a decline? What if QQQ goes down 50% or more from the high? You’ll end up down 90-95%. Timing is important with the leveraged funds.

@Proud_Troll Жыл бұрын

@@projectfinance Right, so I'm thinking of putting money in when the bull market starts and taking it out when recovery ends. Is there any problem with that?

@projectfinance Жыл бұрын

@@Proud_Troll the only problem is getting the entry and exit timing right

@Proud_Troll Жыл бұрын

@@projectfinance Is that the only problem? (I really appreciate your help, by the way.)

@projectfinance Жыл бұрын

@@Proud_Troll The worst-case scenario is a prolonged bear market / extended period with negative returns, as it will drag TQQQ's price way lower. Then, when the market starts recovering, the % gains on the lower-priced TQQQ price lead to smaller $ gains. If you look at the long-term performance of VXX, you'll see what this leads to. VXX is different, though since it tracks the daily % changes in near-term VIX futures, which are typically always declining. I'm just saying I would never recommend TQQQ as a "set it and forget it" long-term "investment." It's designed to be a shorter-term trading product, which is explicitly stated by the issuing company.

@warpfrenzy 3 жыл бұрын

Call leaps solve this problem. You have to own the underlying while also getting all the benefits. For example if you bought leaps on TNA in April that would have been big win.

@TheDanaYiShow 3 жыл бұрын

Fantastic educational video as always, love the channel and the content :)

@v3getaOFFICIAL 3 жыл бұрын

very informative video. im a retail investor not trader. i will stick with ARKK, aiming to revisit it in 3 years. thanks

@steve99912 Жыл бұрын

Puke

@mystockmarketpicks263 3 жыл бұрын

I remember you. You had a great explanation on options and implied volatility. Happy to see you are still teaching. You know your stuff for sure!

@jaybinks871 3 ай бұрын

tfw you've had a TQQQ for like a year and didn't know any better...

@projectfinance 3 ай бұрын

😂 you can definitely see huge returns in TQQQ *IF* you buy during a big decline. If you buy TQQQ at the bottom of a bear market the gains can be wild. However, the drawdowns are going to be massive as well, so it goes both ways. And the way TQQQ works is based on math (a multiple of QQQ daily returns) and not the value of any holdings. This matters because TQQQ has not yet recovered above the high in 2021, despite QQQ being well above it's high during the same period. Anyways, thanks for watching!

@jaybinks871 3 ай бұрын

@@projectfinance Thanks for the video! Might've been a good idea afterall though because TQQQ sitting at 91% total return and SPXL is at 105% total return! I literally have not looked at these in months lol

@GBM0311 3 жыл бұрын

Guessing this is a re-release? Tqqq is up 90% over 1 year. Edit: nvm guessing this is one from your other channel you're posting here now!

@projectfinance 3 жыл бұрын

Yes it is a re-release from the other channel. I'll be migrating most of the content to this channel so I can just focus on one channel. It's all investment/stock market related anyways. The focus of this channel will remain to be options but I'll do some more broadly-focused content from time to time. TQQQ is doing amazing, but that's because we've had a massive market rally without many big downside movements. Leveraged bullish ETFs will outperform the underlying index if there is a relatively linear trend. However, if you look back to March of 2020, TQQQ went from $60 to $15, which is a 75% decline. If you're comfortable with losing that or more during a big market crash, then that's all that matters. I made this video to inform people of the risks associated with investing long-term in a leveraged ETF.

@GBM0311 3 жыл бұрын

@@projectfinance thanks for the reply, look forward to seeing more and thanks for all the great videos! This video may save some people some heartache, run ups like this don't last forever.

@kiracriado6109 3 жыл бұрын

@@projectfinance what is your other channel name?

@ofaqya 3 жыл бұрын

Thanks!

@Majromax 3 жыл бұрын

To explain the drag, compare what happens if you trade the S&P yourself on margin. Suppose you have $1k in capital and double that with leverage to buy $2k in the index fund, for 2:1 leverage. If the index drops by 10%, the investment is now worth $1800, and your net capital is $800 -- now giving you 2.25:1 leverage. When trading on margin, your leverage decreases as your portfolio increases in value, and it increases as your portfolio loses value. But the leveraged ETFs attempt to reset their own leverage on a daily or near-daily basis -- causing this "drag."