The market value of Southern Double Long SK Hynix has evaporated by more than 80 billion Hong Kong dollars in one month, with a pullback of nearly 75% since the high point in June.
According to Odaily, on-chain analyst Ai Yi posted on X platform, stating that in an extremely volatile market, taking the example of SK Hynix’s stock price and the initial price of the ETF both at 1 yuan, if there is no significant decline and SK Hynix’s price oscillates for 20 days with a daily fluctuation of ±10%, after 20 days the final price of SK Hynix is 0.9984, basically returning to the starting point; however, the net value of Southern 2x Long SK Hynix ETF is only 0.7978, with a loss of more than 20%. Such 2x or 3x leveraged ETFs experience “volatility decay.” In order to maintain the target of “2x daily returns”, position rebalancing after each market close is necessary, meaning buying more when prices rise and selling more when prices fall.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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