BetaPro Crude Oil Leveraged Daily Bull ETF T.HOU

This is not a long term play

[RagingBull3]

Just pull up a long term chart, 20yrs, all you see is down, down, down, and way way down.

Here's a simple example to explain why:

Pretend oil is $10 and an 2x ETF share is $10 also

If oil goes to $9 and then back to $10.  That's -10% and then +11.11%.

So 2x ETF goes -20% and then +22.22%....... Now do the math on ETF share price

ETF goes to $8 and then to $9.78 !!!!   NOT BACK TO $10.

You LOSE everytime it goes down and up.     Oil stayed the same at $10 but your ETF just went to $9.78.

That's why the long term chart looks the way it is.   

This is common knowledge now, but when these first came out, they didn't explain this clearly.   They used the words Cantango, Backwardation, futures.... to confuse people and keep people in the dark about this simple fact.

Here's the math  $10 * 0.20 = $2  so minus $2  so ETF goes to $8

$8 * 0.2222= $1.7777 so plus $1.78 so ETF goes to $9.78

[RagingBull3]

Posted this back in March, worth repeating.      

[RagingBull3]

But as I understand, HOU temporay not 2x anymore.     So the "Math" problem is not there any more..... but Contango/Backwardation is I think.   Anyways, you play the futures, be prepared to get squeezed.   

[marvelmaker]

I thought too I could hold HOU long terme and be a winner. They are only meant for trading and exiting daily

[smashblox]

Finally some body got it. as long it is going up and down .. you will always lose money... if it goes only straight line up then  you make the money. so buy when sure that it is going up and exit before it goes down .. it should be very short play.

[itharami]

Most people here get it that laveraged ETFs lose their value over time.  Problem here is that fund manager broke its underlying mechanics yesterday and a lot of people lost money because everybody thought this would be now trading for pennies, as it should.  Then today, we have somebody making 2-3-4 posts per page how price should be $2.32+x, and making a firm argument how this has

[timetolearn]

"Short term purpose only"  is exactly what Horizon stated clearly in the prospectus.  Any leverage product (2x, 3x etc) that reference a futures contract (subject to expiry and roll risk)  is intended for short term hedging and "speculation", not for investment. Its meant for the pros.