VB.CO will launch the Innovative financial derivatives —— Leveraged ETF
You can use this financial product to amplify your earnings, and you can go long and short in an unprecedented by easy way.
What is a leveraged ETF?
A leveraged ETF is a trading product that tracks a certain multiple of the underlying asset ’s daily rate of return (such as 2x, 3x, or -1x, -2x). If the underlying asset price rises by 1%, the corresponding 2 times, 3 times leveraged ETF will rise 2%, 3%; and the corresponding -1 times, -2 times products will fall 1%, 2%.
The leveraged ETF is essentially a fund managed by a professional financial engineering team. Behind each ETF product is a certain number of futures contract positions. The fund manager can dynamically adjust the futures positions so that the entire fund share can maintain a fixed leverage for a certain period of time. multiple. The management and maintenance of the investment portfolio are handled by a professional team, so that investors can easily build their own constant leveraged investment portfolio without having to understand the specific mechanism.
Characteristics of leveraged ETF:
Similar to futures contract products, leveraged ETF products are all derivatives with leverage effect, which can amplify investors' returns and become a cheap risk hedging tool. But compared to futures contracts, leveraged ETF products mainly have the following unique characteristics:
- Similar to spot trading with no margin required: users can trade this leveraged product just as they would trade a spot product.
- No risk of liquidation: Due to the inherent characteristics of leveraged ETF products, we will regularly rebalance the fund's investment portfolio, so investors do not need to worry about the risk of liquidation.
Xiaoming, who is optimistic about BTC, took 10000 usdt to buy BTC3L (bitcoin tripled longer). One day later, BTC rose by 20%, and the leveraged ETF would rise by 60%. Your own income.
Xiaoming, who is optimistic about BTC, took 10000 usdt to buy BTC3S (bitcoin tripled short). One day later, BTC fell by 20%, and the leveraged ETF would rise by 60%. Get three times the income.
Risk: If Xiaoming buys an ETF and the market moves in the opposite direction, the loss will usually triple. For example, if you buy a 3x bullish ETF, BTC drops 10% after 1 day, then Xiaoming's 10000USDT will become 7000USDT. But if it falls by 20% or more, Xiaoming's loss will not reach 60% or more. Due to the "rebalancing mechanism", when the reverse is more than 15%, the loss will not reach 3 times, but after looking at the right direction, the profit can reach 3 times.
Regarding the fact that leveraged ETFs never burst, please see the question reference:
Trading guide see:
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May 12, 2020