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ProShares UltraShort 20+ Year Treasury Message Board

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  • tennistocks tennistocks Nov 14, 2010 11:27 AM Flag

    Morning all

    My Quotetracker chart and other charts show that TLT is already below the 200 day moving average. Not sure why they are different.

    Is TBT a day trading ETF or can it be a longer term hold?


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    • That's debatable as to whether you can hold TBT for the long run or use it as a "swing/day trading vehicle."

      If we throw our personal market and economic opinions to the side then the rational conclusion would be to use it as a day/swing trading vehicle. TBT is a double beta etf which decays over time. If the treasury market trades sideways in a given range then the etf would trend toward zero over a given period.

      However, if you take into account your own opinions such as "i believe the 20y treasury yield will rise to 4.5% by Jan 2011" then you'll probably would want to be in TBT since the etf will greatly outperform any single beta etf durinig that time. The decay pose a huge risk to your position.

      The best way to take advantage of the decay is to short a double beta etf that is opposite the etf you would like to buy.

      For example, UBT is an inverse of TBT. This etf is thinly traded compared to TBT. I thought about buying puts on the etf but the spreads were too large because of the lack of volume. With this trade, i would be using the decay in my favor.



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