Why Leveraged Funds Buy High and Sell Low Every Day

Tobias Hexter of True Partner Capital, nearly three decades trading derivatives from the Amsterdam pits to Hong Kong, shares a piece of history almost nobody knows. Right before 2008 a triple long and a triple short financials fund launched. By the time the damage was done, the triple long trading at zero surprised nobody, but the triple short had also lost roughly 90%. The mechanic is daily rebalancing, which forces these funds to buy at the high and sell at the low. 📊 tastylive: https://www.tastylive.com/ 📰 Get Tom's pre-market analysis every morning: https://www.tastylive.com/newsletters 📘 FREE Options Strategy Guide: https://tinyurl.com/bp9ms763 📱 Follow tastylive on X: https://x.com/tastyliveshow Chapters 00:00 Three decades trading volatility 01:10 Are investors overpaying for protection 02:46 Why Asian volatility sits so much higher 05:05 Whether daily options suppress volatility 06:34 What happened when the sellers left 08:00 The leveraged ETF problem 08:32 The triple long and triple short 09:00 Why rebalancing destroys both 11:50 Why he hasn't liked dispersion 29:00 Why he won't call this one #tastylive #tobiashexter #leveragedetfs #volatility #zerodte #dispersion #rebalancing #marketstructure #optionstrading #stockmarket tastylive is a real financial network, producing hours of live programming every day. Follow along as our experts navigate the markets, provide actionable trading insights, and teach you how to trade. With over 120 original segments, and over 25 personalities, we'll help you take your trading to the next level, whether you are new to trading or a seasoned veteran. tastylive content is created, produced, and provided solely by tastylive, Inc. ("tastylive") and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read all applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange Traded Options Risk Disclosure Statement found at https://tastytrade.com/disclosures/. Past performance is not indicative of future results. Performance is not presented net of all commissions, fees, and expenses. Multi-leg option strategies incur higher transaction costs than single leg trades as they involve multiple commission charges. Examples provided are for illustrative, informational, and educational purposes only and are not intended to be reflective of results you can expect to achieve. Supporting documentation for any claims, including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.