NVDL is currently at $69 while NVDA is at $129. NVDL closed at $85.25, while NVDA reached a closing peak of $135.50 in mid-June. NVDL is currently 24% away from its peak, while NVDA is at 5% away. If NVDA reaches its previous high of $135 today, NVDL would only be at $76, which is a $9/share difference from mid-June. That means you lost 12% of your money.
TLDR: If NVDA exhibits large daily variations, you’re going to be badly hurt by NVDL in the long run.
I’m not sure how often I need to say this, but here it is again:
NVDL is intended for day trading and generating quick profits.
Investing in NVDL is KILLING your returns if you’re seeking to make long-term investments. You will lose a lot of money for the “privilege” of owning the stock via interest unless you are riding a straight profit on the stock (i.e., no dips). This is because the maintenance required on the stock is more than 1.5%.
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Now, average down on 15% declines, and after 30, 45, or 60 days, check where those figures stand.
Purchasing NVDL at 10% or less dips and then selling covered calls when the stock recovers that 10% has allowed me to make a good living.
such as this moment. I sold two at ninety-five and eight at ninety-five. I believe I earned almost $4000 in premiums. In any case, I don’t care if it gets assigned because I’m going to sell around 90, or wherever it peaks after earnings. For that reason alone, it’s an excellent ETF on which to sell CCs.
This would only imply that my investment increases with NVDL, right? Using the numbers you provided in this post and assuming that both reached their previous maximum profits, would NVDA only increase by 9% and NVDL by 24%? From that angle, it appears like NVDL is superior in the near term, at the very least.
Many people claim that investing in NVDL results in lower returns compared to NVDA.
Here’s the data:
- NVDA 1-year change: +185.5%
- NVDL 1-year change: +355.78% (1.94x the underlying)
It’s baffling to hear that a double-leveraged ETF might provide lower returns than the underlying asset when you’re bullish on it. The leveraged ETF simply amplifies both the upside and downside risks. If the underlying asset goes up, you will always see higher returns with the leveraged ETF. How is this even a point of debate?
I have NVD3, which is a 3X leveraged ETF. Unfortunately, I bought it at a terrible time when NVDA was at $140. Given the recent extreme volatility, I’m currently down a lot. However, if NVDA hits the price targets some analysts are predicting, like $150 to $200, my calculations suggest I could end up with a substantial gain.
That said, if I do see a decent profit, I plan to sell the ETF and switch to NVDA stock. I’ve personally felt the stress of volatility decay—on days when NVDA drops by 5%, NVD3 could fall by 15%. It’s definitely not for the faint-hearted. And if something like a new pandemic were to hit, a 30% drop in NVDA could mean a 90% drop in NVD3. So, it’s very risky.
What favorable opinions do you have about Nvidia then?