Very early right after the introduction of Leveraged ETFs in 2007/08 I started to invest in these double short and long ETFs. My investments in UYG and SKF never did as well as I expected, caused me to start thinking an old maxim of mine. Do the math.
Today, few years later I identified several opportunities to use these products correctly by timing and allocating my investments in LETFS properly.
Based on the general idea of “what these products are and what they are designed for” first I will give an overview about the Leveraged ETFs. Then, I will evaluate on double and triple leveraged ETFs on the principle how these products are structured which factors influence their movements and how they behave short and long term. Finally, based on these findings, actual “trends” and market volatility influencing “events”, I will try to construct arbitrage trading strategies using the “strength and weaknesses” of these products.