Replies to post #13122 on Direxion Daily Financial Bear 3X Shares (FAZ)

[Porgie Tirebiter]

I think the Russell 1000 will continue to oscillate between the high 700s and low 800s but with a long term upward trend.

But here's my point: Compared against the base index both FAZ and FAS decay rapidly in value.

As sort of a mid-point in the Russell 1000's recent range I'll use Russell at 830. My numbers are rough and are just based on quick glances at the chart, so don't take me apart on decimal points. Around Nov. 9th the Russell 1000 was at 830 and FAZ traded at 11.20. On Dec. 21, the Russell 1000 was again at 830 and FAZ traded at 9.80.

So with the rate of time decay in FAZ, you would need the index to drop to less than 830 by the end of January just to maintain today's trading price of 8.70. And at the end of February, you would need the index down around 800 to maintain today's share price. And the more the index oscillates, the faster the rate of decay is.

So it doesn't matter if you are a bull or a bear, it is a mistake to play FAZ or FAS based upon your long term outlook. You are swimming against a very strong current.