Jun. 19 at 2:46 AM
Subject: weaponizing leverage slippage
@DonCorleone77 @toffernelson @howardlindzon @Steve_TheBull_Rogers @Tenzen70
Curious what you gentlemen think about what seems to be a real inefficiency I’ve found in how leveraged ETF decay can be weaponized instead of endured.
As most of you know, daily-leveraged products bleed hard over time due to volatility drag (image 1 explains with
$NVDL vs
$NVDA). This slippage is typically seen as a risk — but what if it’s actually an edge you can utilize by shorting the inverse?
Example (YTD 2025):
•
$SPXL (3x bull) = -6%
•
$SPY = +2%
• Shorting
$SPXS (3x bear) = +18%
Same market, same directional thesis. But instead of being punished by decay (buying SPXL), you profit off it (shorting SPXS).
Assuming you size risk appropriately (say 5%), wouldn’t shorting the inverse almost always be a superior play vs buying the leveraged long? (E.g., short SOXS instead of long SOXL.)
Am I missing something here, or is this just overlooked by most?
