Replies to post #17707 on Velocityshares 3X Inverse Natural Gas Etn (DGAZ)

[budmgd]

are you comparing that same natty contracts?

[C C]

[img][/img]Current natty price trades off a basket of forward months contracts

Why it moves like it does
Read the perspective...can better understand how it works

Say we Are in March contract
Natty has to have forward months contracts moving in tandem to move up or down

If one of those forward months is not moving in tandem
natty can be in trading range


cc

[ybnormal]

You're not accounting for the compounding effect. U and DGAZ both track the percentage changes in NG, not the dollar value, and they compound daily. Like if you had a stock at $100, and it went up 50% in one day, it would be worth $150. Same $100 stock goes up 10% a day for 5 days and it's worth $161. The same goes for when it drops. Also you have to factor in the decay, and the fact that there was a rollover while in backwardation, and U/DGAZ changed contract months as well. Kinda complicated I know...