*** BBOZ - Inverse ASX200 ETF ***, 46988957, page-8 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Originally posted by bllp: ↑

BBOZ, BBUS, SNAS are the leveraged short ASX ETFs that I’m aware of. There’s a separate BBUS thread which BBOZ buyers occasionally post on. XJO thread also has some BBOZ’ers. These ETFs all share the same attraction for bears, or those looking for strong hedges against their longs without using options etc. They’re only good short-term and you need a good crystal ball to do ok with them. I’ve been in and out of all 3 several times, but not lately (except for a quick SNAS scalp). There are several negatives to these which I’ve learnt about over the
last few months. The risk/reward ratio is poor unless your timing is spot on. Put in say $10k with great timing and the market drops 2%, so you profit $500. But what if the uptrend continues? You’re stuck, or forced to sell at a loss. Not worth the stress, in my case anyway. Check out the morale on the BBUS thread. It’s low, to say the least. I’ve learnt it’s much better to trade say 10 quality small caps @ $1,000 each on a short term basis. You can hang onto stocks forever, and if you choose quality then you’ll do ok sooner or later. Hang on to these 3 and their inherent decay eats away at them and you need the market to fall further and further as time goes on to break even or profit. With the S&P200 in a channel recently, BBOZ has been a very poor bet. Of course if you can time any future significant corrections then it’ll be a party. I’m a perma-bear but learnt my lesson and am now hunting profitably for quality among the small caps. I’ll be jumping back into these shorts when there’s a clear indication the markets have rolled over. Yes I’ll miss the first drop or two but I’ll be sleeping well in the meantime. Just my 1 cent’s worth. Glta.

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Well does today seems to be a pretty clear indication then? With these things as you note, really hard to time. I reckon accumulating at expensive points and deweighting on the down. ASX could easily drop another 10%, 15%? Or not.

I noticed some people think the more leverage means the ETF must be better - I don't necessarily agree on that. Definitely more risk, but also more costs associated with the ETF under the hood (so you get 'slippage' in there). BBOZ has that, but over time I have not seen it being too significant.

One thing also people are not discussing much is that BBOZ can be a good hedge against Beta. I have a bunch of equities that are long, and the BBOZ is a nice short to hedge that and focus more on the Alpha. So take today for example, so far the ASX200 is -2%, most of my stocks are down but by less than that, so with the BBOZ you can make money on a down day. Conversely, it drags me back on the up days though.