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ProShares Ultra Real Estate Message Board

  • photojet_ayer photojet_ayer Sep 18, 2009 4:59 PM Flag

    Question for the board

    Back in January I bought URE around where it is now and also SRS as a hedge against URE going down..I figured it was a reasonable strategy..however what happened shocked me and left me scratching my head as to what these EFT's are about...while URE dropped to 1.5 and now is on it's way up, SRS is worth roughly 10% what it was back in went from in the 80's to 9 and went down steadily as URE was going into the ones.

    How is that possible? What went on here? I'm really confused and hope I can learn a thing or two from you guys...


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    • it just sounds attractive because it has the "2X"
      it's a poor use of leverage

      and if you say so -- ppl blast you for being short interest

      but that just shows how ppl dont understand this -- you cant short URE. it isnt a stock. you can buy SRS - but that doesnt affect URE

      theyre both a collection of positions and deriv contracts.

    • it's called decay

      URE is 2x the underlying

      put it in Excel
      assume a stock goes from 100 to 95 to 100 to 95 to 100 ... etc
      it is even - now double each days gain/loss and see where you end up -- close to $0

      this isnt a stock
      it isnt a mean reverting position
      it doesnt mimic a recovery in CRE

      it can be a good hedge -- if done right, or a good bet for a very short time -- like earning season, or for when the reits start tapping TALF (DDR soon) or unsec markets etc etc etc

      got it?

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