RE: Question? How does HOU workThere are several posts, and a bunch of lawsuits, that address the way these derivative based ETFs work. There is no linear 1:1 relationship between the price of the commodity and the price of this security.
Once the security resets to lower prices, you are starting from a new base. In fact, this happens daily.
So the problem is that oil is at 90 and HOU is at 7 and change. If you look at history, say HOU was at 25 when OIL was at 110 if I remember correctly. For HOU to reach 25 from here, Oil would have to steadily climb over time without stop (as it did in 2007) so that the futures contracts held are worth more and more and that the managers don't have to buy a ton at the higher prices to keep their AUM steady.
Maybe Oil would have to go to 250 over the next 6 months to get HOU back to 25, I don't know what the math is to figure this out. Do you see what i'm trying to say?
Bottom line: the commodity based Horizons leveraged ETFs are dangerous, and usually should be held for SHORT periods of time... The huge volume you see every day is not from buy and hold investors. When a commodity falls over a long period, this is death for these types of securtities. That's why HNU and HOU are at a 20% of where they were 2 years ago, whereas the commodities are at 60% or 40%.