Shorting entire market. Proshares ETF. WTF?

[phantasms]

Hey all. I'm a, even still, super happy green and long TSLA investor. Say I thought the market was going to tank much much more, how can I take advantage of that terrible outcome. I see these Proshares ETFs, ticker SDS for example. I know that they're meant to inversely mirror the market but what I don't understand is the previous all time highs. SDS topped off at $1,579 back in 2009. It currently sits at $29. Even if the market goes down 100%, which it wouldn't, that would only double that $29, no? Is there a compounding thing? There's no margin involved in these are there? It's a straight purchase, hold, and sell? I'm too new and stupid to play with margin.

ProShares UltraPro and UltraPro Short ETFs

Thanks!

Best,
Gene

 

[tjkessler]

These sorts of things are typically used to hedge against securities that have large gains where you don't want to take
capital gains. Over a 30 year time frame they are a guaranteed loser. There are all sorts of whacky ETFs and ETN (exchange traded notes) that allow you to gamble some of them in 2X or even 3X kinds of ways. Another thing to watch out for is that most of these funds or
notes have very large fees and some of them are purely synthetic (which means they're guaranteed by a bank, so if the bank goes under you lose everything). I'd certainly contact a financial advisor before trading securities like this one.

 

[defc0n]

I often buy SH or PSQ when I think the market may go down soon.

 

[TMThree]

I like futures. Lots of choices, but here's an easy one:

/MES for 5x (in either direction) and /ES for 50x (in either direction) for S&P 500.

 

[phantasms]

I like futures. Lots of choices, but here's an easy one:

/MES for 5x (in either direction) and /ES for 50x (in either direction) for S&P 500.

I’m new at this. I understand it’s not an equity but does it trade like one? Say I buy $10k of it and the market goes up, the absolute most I could lose it $10k, right? I don’t want it to be the case that I buy $10k, market goes up, suddenly I owe $100k. lol

I’d tremendously appreciate if someone could simply explain how exactly these work. The truth is, sadly, I expect the worst in the next 12 months. If I can capitalize on it to buy more green tech for myself and donate more, I’m all for it.

Thank you!!!

 

[phantasms]

Also, SDS for example, it was at $1500 in 2009 and now sits at $29. Why such a huge difference? It couldn’t get back up to that amount again, could it?

Thank you!!

Best,
Gene

 

[TMThree]

I’m new at this. I understand it’s not an equity but does it trade like one? Say I buy $10k of it and the market goes up, the absolute most I could lose it $10k, right? I don’t want it to be the case that I buy $10k, market goes up, suddenly I owe $100k. lol

I’d tremendously appreciate if someone could simply explain how exactly these work. The truth is, sadly, I expect the worst in the next 12 months. If I can capitalize on it to buy more green tech for myself and donate more, I’m all for it.

Thank you!!!

Thats the great thing about futures, you aren't buying the asset. I'm going to use the base fees on TDameritrade:

1 /ES contract costs $3.50. That's it, nothing else. If you buy one contract and the S&P goes up 10 points, you get $500. If it goes down 10 points, you lose $500. Simple math.

1 /MES contract costs $2.50. It's the same as above, but $5 instead of $50 per point.

Futures works in either up or down direction, and there is no limit for how long you can hold it. But it is risky as hell since even during overnight trading, you can gain or lose $5000 on a single /MES. Today alone the market dropped 100 points, went up 100 points, dropped 100 points and is now settling down before open..

TD requires $25,000 to trade futures, but you can sign up to brokers who have $500 requirements. Try ninjatrader's brokers for the $500 requirement. Added bonus is their trading fee is significantly lower - about 60 cents per trade instead of $2.50

 

[phantasms]

This aged well.

Thank you all again!