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ETF Brokers and their instruments

  • #1
  • First Post: Dec 20, 2015 4:56am Dec 20, 2015 4:56am
Hello everyone, had an idea these days to open a long term long position in a certain ETF, to be more specific I'm interested in buying ProShares Ultra VIX Short-Term Futures (UVXY) for a price of 34 and a Take Profit target for the price of 50.

As an amateur I have two questions
1) What brokers offer trading such instruments?
2) How long can I hold a position on this instrument or other high volatility ETF's?

Excuse me if this post should be in an other section of the forum.
  • #2
  • Edited 8:38pm Dec 20, 2015 7:53pm | Edited 8:38pm
Quoting Skotidas
Hello everyone, had an idea these days to open a long term long position in a certain ETF, to be more specific I'm interested in buying ProShares Ultra VIX Short-Term Futures (UVXY) for a price of 34 and a Take Profit target for the price of 50. As an amateur I have two questions 1) What brokers offer trading such instruments? 2) How long can I hold a position on this instrument or other high volatility ETF's? Excuse me if this post should be in an other section of the forum.
I wouldn't hold any leveraged ETF for a long-term position unless you're short. The "Ultra" series is a leveraged product which was designed for short-term trading. The 3x leveraged ETFs are much worse than the 2x ETFs like UVXY.
The way they're calculated, you'll lose unless you get in a steady trend. At times you'll do really well over short periods of time but dangerous in the long-run.
If you want to hold a long-term position in the S&P volatility, use the normal ETF (VXX). It will move @ 50% of the leveraged ETF but at least if you need to hold longer to reach your target you won't be holding a "flawed" ETF.

You can hold an ETF as long as you want. There's no "expiration" as in futures even though they're based upon the futures contracts. The "rolling" is done automatically by the firm offering the ETF.

Look @ the chart below to see the difference in how they perform over a 1 year period. The recent spike in volatility helped the 2x levered ETF get better in line with the normal ETF.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: vxx.png Size: 85 KB
Click to Enlarge Name: ugaz.png Size: 86 KB
  • #3
  • Dec 23, 2015 5:55am Dec 23, 2015 5:55am
Quoting srt
{quote} I wouldn't hold any leveraged ETF for a long-term position unless you're short. The "Ultra" series is a leveraged product which was designed for short-term trading. The 3x leveraged ETFs are much worse than the 2x ETFs like UVXY. The way they're calculated, you'll lose unless you get in a steady trend. At times you'll do really well over short periods of time but dangerous in the long-run. If you want to hold a long-term position in the S&P volatility, use the normal ETF (VXX). It will move @ 50% of the leveraged ETF but at least if you...
Thank you for your time responding.
Currently my broker is XM, which does not offer ETF instruments. Do you recommend a specific broker for ETF trading?

*Also, it seems like shorting them is a very good long term investment, am I wrong?
  • #4
  • Last Post: Dec 29, 2015 8:10pm Dec 29, 2015 8:10pm
Quoting Skotidas
{quote} Thank you for your time responding. Currently my broker is XM, which does not offer ETF instruments. Do you recommend a specific broker for ETF trading? *Also, it seems like shorting them is a very good long term investment, am I wrong?
There are forex brokers that offer stock & ETF trading with CFDs but I don't know which ones they are.
I trade ETFs with an equities broker.
My broker requires a minimum of $10K to open an account & if you day-trade you need to keep $25K in the account.
Best to find a CFD broker or another broker that has a smaller minimum if you don't want to have a larger account.
Yes, I usually short the leveraged ETFs.
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