/biz/ - Business & Finance

>>56900787
>How does the short side of that work?
the short side is that long term, factor certificates are not ideal unless you expect the stock to go up. here's a short example.

initial price: 100 bucks
day one: normal stock -3% factor -10%
day two: normal stock -4% factor -20%
day three: normal stock +10% factor +40%
as a result: normal stock up 2.4%, factor certificate DOWN 16%. so basically => crabbing and lots of volatility, your certificate WILL lose value.
>What's the incentive to write them?
just like with any other derivative, nice spreads for the market maker and FOMOing brainlets like me losing their money because they can't think for themselves