Q&A
Do you think the SPY, QQQ, and similar index funds will be split ever so it's easier for us to buy 100 shares?
It is unlikely that SPY, QQQ, or similar index funds will be split anytime soon. While some ETFs have split in the past, such as the S&P 100, the S&P 500 has not split. Fractional options are not expected to be introduced, and the likelihood of a split is low due to the complexity of derivatives and the interests of fund managers.
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Actionable takeawayFractional options are not expected to be introduced, and the likelihood of a split in SPY or QQQ is low.
Q&A
What do you think about leveraged ETFs?
The speaker states that leveraged ETFs are not recommended, as they are not working for the investor. The speaker suggests that leveraged ETFs are a friend only when they are working, but otherwise, they are not a good investment.
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Actionable takeawayLeveraged ETFs are not recommended for investment due to their high risk and potential for significant losses.
Q&A
Why does it not matter to the person who's issuing the ETF?
The speaker explains that the issuer of an ETF is not concerned with the buyer's needs or the product's value to the public. The ETF is a wrapper to sell something to private entities, such as private equity or unions, rather than serving the public's investment needs.
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Actionable takeawayThe speaker suggests that ETFs are often used as wrappers to sell products to private entities, rather than serving the public's investment needs.
Q&A
If you had to make a bet, do you think there was more stocks than ETFs or more ETFs than stocks?
The speaker states that there are more ETFs than stocks, with 4,873 ETFs compared to 4,400 individual stocks. This is contrary to the speaker's initial belief that there would be more stocks.
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Actionable takeawayETFs have become more numerous than individual stocks, indicating a shift in investment preferences towards ETFs.
Q&A
What is the importance of understanding the underlying assets of an ETF?
Understanding the underlying assets of an ETF is crucial because it helps investors avoid potential risks associated with not knowing what they are investing in. The speaker emphasizes that the financial industry's ability to package nearly any exposure into something that trades like a stock can be misleading, and investors should take time to understand the actual assets they are investing in.
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Actionable takeawayInvestors should take time to understand the underlying assets of an ETF rather than just selecting based on ticker or performance.
Q&A
Is there any advantage of trading options futures futures options versus stocks ETF options?
It depends on the product. For example, Natty Gas is traded via futures options, while SPX and SPY are options for stocks. Tax advantages exist for SPX, but the speaker recommends trying both and staying with what feels comfortable.
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Actionable takeawayChoose between options, futures, or ETFs based on the product and personal comfort.
Q&A
When is it best to use ETF or ETF options and when is it best to use futures or futures options when trading commodities?
The speaker suggests preferring ETF options for high-level trading but recommends futures for specific commodities like oil (CL) and gold (GC) due to liquidity and tradability. ETFs are preferred for certain assets like silver (SLV) and gold (GC) based on liquidity and tradability. The key factors are liquidity, tradability, contract size, and risk leverage.
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Actionable takeawayPrioritize liquidity and tradability when choosing between ETFs and futures. Use futures for commodities with higher liquidity and tradability, and ETFs for specific assets like silver and gold.
Q&A
Is it more profitable to trade by selling volatility with short puts and short calls in a leveraged bull ETF like TQQQ rather than QQQ?
It can be more profitable to trade by selling volatility with short puts and short calls in TQQQ due to higher liquidity in the underlying stock. However, the options in TQQQ are less liquid, which may affect the edge and risk profile. The underlying stock and options markets are influenced by the same models, but liquidity differences can impact trade execution and edge.
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Actionable takeawayConsider trading in TQQQ for higher liquidity in the underlying stock, but be cautious about the liquidity of options and the potential for wider spreads.
Q&A
Are there certain financial products that we stay away from investing no matter what?
The speaker lists penny stocks, pink sheet stocks, meme stocks, meme coins, vanity coins, structured ETFs with high fees, and private structured products as financial products to avoid. They emphasize the risks associated with these products, such as high fees, lack of transparency, and potential for significant losses.
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Actionable takeawayAvoid high-risk financial products like penny stocks, meme stocks, and structured ETFs with high fees due to their potential for significant losses and lack of transparency.
Q&A
Is XSP a better option than SPY for trading?
XSP is cash-settled and does not have the risk of stock price movements after the close, unlike SPY. However, XSP may involve additional fees and has different tax implications compared to SPY.
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Actionable takeawayXSP is suitable for traders who prefer cash-settled options and are willing to accept potential additional fees and tax implications.
Q&A
What are the best ETFs to use for BTC and ETH?
The speaker recommends ETHA for Ethereum and BTO for Bitcoin. They note that ETHA has high volatility and is the primary ETF for Ethereum, while BTO has the most option volume for Bitcoin. The speaker also mentions trading IBIT and BITO, but prefers BTO for its volume and liquidity.
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Actionable takeawayFor Ethereum, ETHA is recommended due to its high volume and liquidity. For Bitcoin, BTO is suggested due to its high option volume and liquidity.
Q&A
Have you traded three time ETFs from the dog pound? Do you like trading them?
The speaker has traded them but does not currently trade them, preferring other investments. They mention that three-time leverage ETFs are short-term trading vehicles and not suitable for long-term holding.
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Actionable takeawayThree-time leverage ETFs are short-term tools with inherent risks due to compounding leverage and margin charges.
Q&A
What is meant by decaying daily resettling or resetting in leveraged ETFs?
Decaying daily resettling or resetting refers to the compounding effect of daily returns in leveraged ETFs, which can lead to losses even if the underlying asset remains unchanged.
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Actionable takeawayLeveraged ETFs can lose value even if the underlying asset doesn't move due to daily compounding.
Q&A
Do you trade RSP? If yes, is there any advantage over SPY?
No, there is no advantage to trading RSP over SPY. SPY has unmatched liquidity in the derivatives market, making it the preferred choice for trading.
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Actionable takeawaySPY is preferred over RSP due to higher liquidity in derivatives markets.
Q&A
Is relying on these ETFs for our primary income a reasonable strategy or is there more risk to the principle than the yield suggests?
It's a sound market strategy if the market cooperates, but there are risks such as market movement, fees, and the use of margin. It's not guaranteed and may not be suitable for all account sizes.
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Actionable takeawayConsider the risks of market movement and fees, and avoid using margin if possible.
Q&A
Can you do something similar if somebody wants to trade how SPX is going to close and you don't want to trade it's too expensive to trade the SPX?
The speaker suggests using SPY (SPDR S&P 500 ETF Trust) instead of SPX (S&P 500 Index) for trading, as SPY is cash-settled and easier to trade. The speaker highlights the difference between cash-settled and stock-settled options, noting that SPY avoids assignment risk and is more straightforward for traders.
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Actionable takeawayUse SPY instead of SPX for trading the S&P 500 due to its cash-settled nature and reduced assignment risk.