/biz/ - Business & Finance

Since this thread needed a better picture, new post.

One thing I don't understand, is why you guys don't use (short-/long) factor certificates on the indexes? No knock-out, and you can multiply your winnings by up to x20.

It's a certificate like an option, that you can get with a leverage. There's no knockout, it has no endpoint and it has continouus leverage.
Instead of a knockout, it has a adjustment barrier, where the price gets reset.
So for example if you got a 4x long certificate and the price of the underlying asset (e.g. the Dow) goes down 25%, instead of having your certificate worth 0 Dollars, the price gets reset when it hits a certain barrier. You'll still lose a lot of money, but it won't go to zero.

Bonus trick: If you think there's gonna be a short pump/dump during the day, because of for example a white house briefing, you can wait for the reset-barrier to get reset during the day and buy the certificate for way cheaper and then gain during the opposite movement.

I'd recommend not holding a certificate longer than 2 days, maybe 3 max.

So why do you use options, futures or even that boring sqqq/lqqq?