More Ultra ETF Voodoo
- stevenplace
- December 8th, 2008
DXO 3 month
I started to slowly build a position in DXO on Friday. It’s up and doing well, and I’ll add a bit more on a pullback.
But looking at the chart… check out the volume- that’s absurd.
And it leads me to my next question: how much are prices of ultra and doubleshort etfs really affected by supply and demand? Technically they’re supposed to reflect twice the change in the underlying etf in daily percentage terms. It seems that you could really game the system here by getting bullish exposure (in this case oil) without having an effect on the underlying market. Of course there should be some arb to pick up the slack, but it does seem suspect.
Any thoughts?
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Tickers: dxo
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