Direxion Daily Gold Miners Bull 2X (NUGT)

[stingray113]

The problem is that none of your examples happen...

Decay is built into the NAV. In other words, the fund is designed to decay. If the fund decays more than it is designed, then the NAV would be lower than the IV, in which case Direxion would redeem/purchase shares at the NAV to raise the market price. This is clearly explained in the prospectus.

Penny stocks dilute off a "pump and dump" to make the share issuers rich. Direxion does not. Direxion only issues new shares when NUGT is overvalued. When the market price of NUGT is worth more than it should be, according to its IV, then Direxion issues only enough shares to correct this. Its NOT dilution, because it doesn't decrease the value of the fund. The fund's true value is based on its IV, and NOT its market price. If you still fail to understand this then maybe you shouldn't be trading these vehicles.

This is the ONLY WAY, and the ONLY TIME new shares are added to the fund. And its done not to decrease the value of the fund, but rather to decrease the pps TO the value of the fund. The fund trades off its IV, and has nothing to do with technical analysis, short interest, etc. Only very rarely does liquidity (ie market demand vs supply) become a factor, and when it does Direxion steps in to correct it.