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ProShares Ultra Financials Message Board

  • oracle_of_yomama oracle_of_yomama Mar 23, 2009 12:28 PM Flag

    Historical Benchmarking -- UYG vs SKF

    Last time SKF traded where it's trading today ~$110, UYG was around $6 (versus below $3 today).

    How is this possible? The decay phenomenon in action?

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    • Today, WFC went up by 24%; BAC 26%; C 19%; AIG 17%; GS 15% and MS 20%.

      Meanwhile UYG went up 25% which is a little bit higher than the average above. I thought the 'ultra' part is suppose to give you closer than 2:1 rather than just a little bit above 1:1. What gives?

      BTW: The English banks are kicking asses with BCS 30% and LYG 50%.

    • While uyg-blow-picklesniffer has somewhat of an offensive style (for some) in his postings, I think he is right with respect to "decay".

      There had been a number of detailed articles, including one in the WSJ, pointing out essentially that leveraged short ETFs do not track the indices well and are not good for long term investment but for short term trading. Interestingly, all those articles seemed to address shorts but not longs. However, I suspect the fundamentals apply in either direction.

    • I think there is a decay thing that goes on with these 2x deals. Better to use them for short term trading. Having said that. UYG might be worth holding for a while.
      I went back and looked at the UYG and SKF over the past year. When it was obvious that the banks were in deep yogurt the SKF had a few days where it acted more like a 3x. Since the increase/decrease in these things is compounded, those several days of overperformance by the SKF led to crazy high prices on a short term basis.
      We might see the same thing happen with UYG since the shoe might be on the other foot now. A few days of overperformance on the UYG could lead to a price spike down the road a ways.
      I want to be around for Apr 2 when the official decision is made on changing the rules on M2M. I also want to be around (with a trailing stop) for earnings. I expect that there is a real possibility for write ups of assets. The SKF and UYG should cross at about $17, if it gets that good. That would be a combined value of $34. Way low relative to the historical combined value.
      When these things start to move they can take on a life of their own outside of the indes tracking.

    • I noticed something odd too. I track C, BAC, WFC and other major financial too. I noticed UYG seems to go up at about the SAME rate as them - like if they go up about 15%, UYG also go up about 15%. I thought the ultra fund has a beta of 2 and should go up at double the rate. On the other hand, if the basket of financial I track go down by say 15%, UYG will indeed go down faster but at roughly 1.5x (say 23%) instead of double the rate (which is good for us).

      So, with the reason up swing (sandwiched with some nasty downs), C, BAC etc. have all done slightly or much better in term of percentage rise than UYG while I expect UYG to perform much better with the ultra boost.

      Net, net, we seem to be missing the ultra element on the way up but not on the way down which is not that good for us. Anyone else saw these?

      • 2 Replies to ericbigwong
      • Because SSO Managers take gains on the way up at twice the amount they do on the way down. You also have to factor that SSO managers are personally shorting UYG. I expect we'll see a bounce when they cover.

      • uyg_blows_picklesniffers uyg_blows_picklesniffers Mar 23, 2009 12:55 PM Flag

        More MORONS talking about dividends and basket changing. Idiots, compare UYG and SKF to the INDEX thaT it follows. You'll discover that they BOTH constantly lose ground to the INDEX

        decay DECAY decay DECAY is WHY why WHY!!!!! Stop giving opinions. Check IYF(for you idiots who don't know what IYF is, its the EXACT same as UYG only at 1X the index movement)When it's components change, they change for UYG, SKF and IYF. OOPS IYF has mirrored the INDEX..



    • UYG inline with ^DJUSFN at 2x.

    • UYG has distributed dividend in dec. and change the composition of the basket.

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