Some additional comments to the ones I have previously made.
These past few months I have considered purchasing these 2X long or short ETFs as a short-term trading vehicle (not AIM) whenever some benchmark is reached. The benchmark that stands out most in my mind is the VIX.
If one looks at a long-term chart of the VIX one can see some good entry points for some short-term trades. If someone purchased a 2X long fund, such as SSO, whenever the VIX goes over 30 then they probably would have made some nice profits in a short period of time.
On the other hand, if someone purchased a 2X short fund, such as SDS, whenever the VIX reached a low reading of less than 15, then they were usually rewarded with a quick profit.
However, these purchases would only be for a short-term trade, not like an AIM holding, which is held for a much longer period of time. Once a certain profit target is reached...say 10% or 15%...then these ETFs would be cashed in.
With that in mind, now that the VIX is over 30 I cashed in one of my income funds today and used the proceeds to purchase SSO. I have put in a GTC limit order to sell all shares of the fund when it gains 15%.
Others might feel differently than me, but I would not use these 2X funds for anything other than a short-term trade. There is just too much potential for downside risk in these funds to suit me.
Best regards,
Ray
