[rsync]

"I've got put options on SPY as well as a portfolio hedge. They lose value every day (theta or the premium you pay for time) and if the S&P goes up puts lose value so fast it would make your head spin"

I wonder if you would compare/contrast with short selling UPRO ?

That is, short selling the triple-long S&P 500 ETF.

The thinking here is that a long ETF (especially a triple long one) loses value every single day[1] due to the natural decay of long ETFs ...

So in a flat market, your short position is positive, and in down markets it is very positive. Further, it's not an option - you're simply short an ETF - so you can hold it through a market rally if you wanted to.

I have never employed this hedge, but it interests me.

[1] except for up-market days, of course ...

[lujim]

I've never tried it. I'm skeptical that a broker would let you short a leveraged ETF since it's a bad deal for them. There are options out there for these but something tells me the decay is priced in or else it's getting into arbitrage territory. I have seen this question asked a few times before but never saw a definite answer.

If you were able to short TVIX or SPXU or any leveraged etf for a long period of time it seems like a near 100% chance of massive gains which makes me think there is a catch.

[explanibrag]

Shorting ETFs is expensive. You need to borrow the shares from someone in order to re-sell them, and you pay them for the privilege.

Futures work on margin with relatively low fees so if you wanted leveraged short exposure to the US market that's what you'd naturally trade.

One of the posters below who describes buying a put and selling a call at the same strike is describing a roundabout futures trade. The put/call method would have far higher transaction costs, though.

[ScottBurson]

There are also leveraged inverse ETFs like SDS, which I have used at times. You don't want to hold them for more than a few weeks at a time because they decay, but for short-term trading they work fine.

[rsync]

"There are also leveraged inverse ETFs like SDS, which I have used at times. You don't want to hold them for more than a few weeks at a time because they decay, but for short-term trading they work fine."

Yes, that's the point - the idea is, instead of buying the short ETF, you short the long ETF.

They both decay, as you would expect an ETF to do, but by shorting the long, the decay works in your favor...