I am probably out to lunch on this, but any comments are welcome. Could it be that some investor could have purchased ZSL at 800 when silver was $10 a few years ago and if silver goes back to $10 in one day that their shares are worth about $32? I did not see any volume on the 3 year chart of ZSL.
My understanding now is the the 2x leverage resets everyday, so it starts again the next day. Therefore, large down moves may not yield the type of results one may thinking of. For example if silver moves down 1% ZSL should move down 2%. Sounds good right. What if silver went from 50 to 40 (about 80%) in one day. Well my understanding is that ZSL will increase 160% in that one day. Assumming silver goes from 50 to 40 which is about 80% that day, and ZSL was at 12 it would go to about 32. Could some poor slob by ZSL at 800 and see silver go back to 10 in one day and there shares are worth about 32 bucks.
I have included a portion of a spreadsheet that I did for my own understanding of six trade simulation. These take into account only drops of every day and no rallies. They are fourty dollar drop in one day, fourty dollar drop in two days, fourty dollar drop in four days, fourty dollar drop in 8 days, fourty dollar drop in 20 days, and a fourty dollar drop in fourty days which is a one dollar drop per day. Only a portion can be shown. Results are below. The percentage is in decimal not percentage.
1 day = 31.20
2 days= 50.40
4 days= 84.00
8 days= 132
If bull markets come down 3 times as fast as they go up this will limit the profits. Looks like is one owns ZSL (as I do) as slow grid down would be better for the price.
Like I said this is my own thoughts on how the leverage works and I don't know if its accurate. Any comments welcome.