When do "inverse" ETFs cover their shorts?

  • Thread starter Thread starter Stephen Tashi
  • Start date Start date
  • Tags Tags
    Inverse
AI Thread Summary
Exchange-traded funds (ETFs) like TZA and RWM aim to deliver inverse results relative to specific stock indexes by employing strategies that include shorting stocks. However, these funds do not actually short stocks directly; instead, they utilize futures or swap contracts to achieve their objectives. The settlement of these contracts typically occurs at the end of each trading day. This approach is often criticized, as it can lead to poor long-term investment performance, making these ETFs less favorable for many investors.
Stephen Tashi
Science Advisor
Homework Helper
Education Advisor
Messages
7,864
Reaction score
1,602
Exchange traded funds like TZA and RWM attempt to get results that are the "inverse" of certain stock indexes. I understand they do this by shorting stocks. When do they cover their shorts? -before the end of each trading day?
 
Physics news on Phys.org
Stephen Tashi said:
Exchange traded funds like TZA and RWM attempt to get results that are the "inverse" of certain stock indexes. I understand they do this by shorting stocks. When do they cover their shorts? -before the end of each trading day?
At the end of the day, and they actually do not sell anything short. They utilize futures or swap contracts and settle at the end of the day (which is a primary reason why they are such crappy investments)
 
Similar to the 2024 thread, here I start the 2025 thread. As always it is getting increasingly difficult to predict, so I will make a list based on other article predictions. You can also leave your prediction here. Here are the predictions of 2024 that did not make it: Peter Shor, David Deutsch and all the rest of the quantum computing community (various sources) Pablo Jarrillo Herrero, Allan McDonald and Rafi Bistritzer for magic angle in twisted graphene (various sources) Christoph...
Thread 'My experience as a hostage'
I believe it was the summer of 2001 that I made a trip to Peru for my work. I was a private contractor doing automation engineering and programming for various companies, including Frito Lay. Frito had purchased a snack food plant near Lima, Peru, and sent me down to oversee the upgrades to the systems and the startup. Peru was still suffering the ills of a recent civil war and I knew it was dicey, but the money was too good to pass up. It was a long trip to Lima; about 14 hours of airtime...
Back
Top