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Tastylunch (28.52)

I guess we still haven't learned our lesson about Leverage



November 07, 2008 – Comments (10) | RELATED TICKERS: SPXL , TNA , ERX

After all it's ok if we do it as long as the i-banks don't right? hah oh well

At any rate the next popular trend I predict on CAPS is going to be picking/trading the new Triple levered ETFS, cuz ya know double just isn't enough.


" As Clint Eastwood might say, "Are you feeling lucky?"

At a time when many investors are hoping for a bottom in this year's plummeting stock markets, Direxion Funds says it's ready to come out with eight new leveraged and inverse exchange-traded funds. (See charts below).

But these ETFs won't just offer a bit more juice. They're set to become the first to offer three-times the leveraging power of their underlying benchmarks. (See related column here.)

Direxion says that the eight 3x leveraged ETFs should launch on Wednesday. They're part of some 36 in the works. (See related story here.)

"Do you have an opinion on the direction of the market? Maybe you are interested in overweighting or under-weighting a certain sector. Direxion Shares powerful 3x leverage (the highest in the ETF and mutual fund industry) seeks to amplify the performance (positively or negatively) of your investment capital by 300%," said the company in recent marketing material made available to investors.

For example, if the Russell 1000 Index gains 1% in a trading session, the Direxion Large Cap Bull 3x ETF is designed to gain 3%. On the other hand, the Direxion Large Cap Bear 3x ETF would move in just the opposite direction. If the same Russell index fell 1%, the ETF's goal would be to gain about 3%.

The new ETFs are listed with net expense ratios of 0.95% per year. (The prospectus for the new ETFs can be found here.)

Half of the initial eight hitting the market later this week will provide 3x leveraged exposure. The other four will offer 300% inverse exposure."

oh lovely. At any rate here are the new ticker symbols for those who care

BGU (large cap Bull)

TNA (small cap Bull)

ERX (energy bull)

FAS (financial bull)

BGZ (large cap bear)

TZA (small cap bear)

ERY (energy bear)

FAZ (financial bear)

All with three times the punch, cuz when double ain't enough, you gotta go triple. Kinda like my sister's espresso.

Why do I get the sinking feeling this the begininning of another really bad bubble?


10 Comments – Post Your Own

#1) On November 07, 2008 at 2:16 AM, DemonDoug (31.42) wrote:

what about a synthetic long on a triple bear fund?  Maybe shorting Jan 2010 Puts on FAZ.  Isn't that like quintuple leverage? lol.

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#2) On November 07, 2008 at 2:26 AM, Tastylunch (28.52) wrote:


LOL. haha that would be nuts!

But you know if there's a way someone would try it :-)

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#3) On November 07, 2008 at 9:33 AM, outoffocus (22.84) wrote:

what about red bull?

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#4) On November 07, 2008 at 10:09 AM, FleaBagger (27.52) wrote:

Shorting puts would be safer than just buying the thing, because you get paid up front (a lot if you are already in the money). What you want to do, if you want to really risk your neck, is short LEAP calls (write them naked, of course) of the ETF that is the opposite of the one you think will go up. Of course most investors don't have enough of a relationship with their broker to write uncovered calls. I'm guessing that's like a $1M relationship or so.

Anyway, if you write naked calls on a stock that doesn't go up, you make money without having to invest anything at all. It's the secret of infinite wealth!

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#5) On November 07, 2008 at 1:02 PM, anchak (99.89) wrote:

Its crazy.....however as Tasty says ...we need to add these to CAPS -ASAP :) :)

Also maybe if the S&P goes to 750 and jobless claims are not completely off the chart...I am willing to put maybe $500-$1000 on the TNA

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#6) On November 07, 2008 at 5:00 PM, camistocks (69.87) wrote:

Anxiously waiting for a 10 to 1 leveraged ETF... :-)

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#7) On November 07, 2008 at 9:20 PM, Tastylunch (28.52) wrote:


I would think espresso levered with redbull would be a really bad idea . :-) If redbull gives you wings... would red bull and triple caffeinted espresso give you rockets? :-)


LOL, Shorting LEAPs? dang dude that's deviously dangerous.:-)


You just know CAPS allstars are going to be spamming these up and down with abandon. :-) Yeah TNA would be the most solid play I would think, less risky than the sector bulls.


why stop there? Forex allows 100 to 1 right? ;-)

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#8) On November 09, 2008 at 8:32 PM, mgiv (39.36) wrote:

aint nothing like making pennies to lose dollars!

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#9) On November 13, 2008 at 10:45 PM, jgseattle (26.10) wrote:

I got busted for buyin some TNA once!  Hope this transaction works out better.

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#10) On November 14, 2008 at 10:07 PM, goldminingXpert (28.62) wrote:

I would never short a leap option. You nuts? I'm crazy but I'm not crazy.

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