[SPXU] Another Way to Profit on a Crash (Part 1)- DO NOT ATTEMPT
SPXU is a very complex financial instrument and you should never trade this. It goes up when the market goes down. It resets everyday, unlike the VIX which functions more like a traditional stock.
Honestly I don't even know how to chart this thing as it seems to function similar to a logarithmic scale but man look at that upside!
There's barely any details on the internet about this thing but it is intended to be a day trade play and NOT intended to hold for more than a single day. Something to do with your daily increase or decrease compounding each day. Every new day it resets and this can really make the trade extremely volatile (please if anyone can explain this better, chime in!).
I tested this out today. Was pretty certain the market was going to go down so I bet 1.5% of my portfolio on the SPXU and SDOW (same thing for either market).
SPXU:
Bought - $14.10
Sold - $14.38
SDOW:
Bought - $30.04
Sell - $30.28
This doesn't look like much I know but if you extrapolate, that's 2% ROI on the SPXU in one day and 1% ROI on the SDOW in one day. What a return!
Instead of day trading it though, which can be quite time consuming and brutal, I want to try to angle for a swing trade.
Keep in mind everything says this is NOT INTENDED TO BE HELD MORE THAN ONE DAY and for the reason why they just say because your winnings or losses compound over time.
But that sounds fantastic if I'm very confident the market will drop in much greater proportion on average each day than it rises over the next 30 days (I do believe this now).
So lets see what happens if I swing trade this bucking bronco. My big market crash bet is on the TVIX (3x the VIX) but SPXU and SDOW could potentially be quite lucrative with a small investment if the market does crash.
Honestly I don't even know how to chart this thing as it seems to function similar to a logarithmic scale but man look at that upside!
There's barely any details on the internet about this thing but it is intended to be a day trade play and NOT intended to hold for more than a single day. Something to do with your daily increase or decrease compounding each day. Every new day it resets and this can really make the trade extremely volatile (please if anyone can explain this better, chime in!).
I tested this out today. Was pretty certain the market was going to go down so I bet 1.5% of my portfolio on the SPXU and SDOW (same thing for either market).
SPXU:
Bought - $14.10
Sold - $14.38
SDOW:
Bought - $30.04
Sell - $30.28
This doesn't look like much I know but if you extrapolate, that's 2% ROI on the SPXU in one day and 1% ROI on the SDOW in one day. What a return!
Instead of day trading it though, which can be quite time consuming and brutal, I want to try to angle for a swing trade.
Keep in mind everything says this is NOT INTENDED TO BE HELD MORE THAN ONE DAY and for the reason why they just say because your winnings or losses compound over time.
But that sounds fantastic if I'm very confident the market will drop in much greater proportion on average each day than it rises over the next 30 days (I do believe this now).
So lets see what happens if I swing trade this bucking bronco. My big market crash bet is on the TVIX (3x the VIX) but SPXU and SDOW could potentially be quite lucrative with a small investment if the market does crash.
Data analyst with a passion for best fit lines B)
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