1. OC TRADERS Leveraged ETF (LETF) Basics Oct 31, 2009
How I Trade Leveraged ETFs: Dec 5, 2009
(presentations can be downloaded at )
Wally Eater,

2. DISCLAIMERS Not a professional trader
Not selling or soliciting anything
Not suggesting trading leveraged ETFs is appropriate for you
What works for me may not work for you
Presentation is for information purposes only and does not represent an offering as defined by the SEC Acts of and subsequent amendments.
Please hold Questions until end

3. EMAIL ASKED FOR QUESTIONS….. THANK YOU FOR REPLYING:
Steve Fought
Skip Griffin
Pam McCord
Phil Peralta
Vince Amato
Franklyn Arnett
Ray Degolia
Rick Edwards
Presentation based on questions from individuals above

4. WHAT IS A LEVERAGED ETF?
An ETF tracks an underlying index or investment in order to emulate performance. The goal is to give investors a way to mimic price. Leveraged ETFs intend to provide 2-3 times the return of the correlating asset. So if the tracked index rises 1% in a day, a 2x leveraged ETF seeks to rise 2% in a day. Inverse leveraged ETFs intend to achieve a positive return if an index declines in value. Leveraged ETFs are designed for day trading- not for swing or long term investments. (edited for brevity).
SOURCE:
New Rules (effective 12/1/09 )-- Increased margin requirements from 25% to 50% for 2x and to 75% for 3x. Inverse leveraged ETFs would increase from 30% to 60% (for 2x) and not to exceed 100% (for 3x).

5. WHY LEVERAGED ETFs?
Leveraged returns (2-3x the average return of the index they seek to mimic)
DAILY investment goals- NOT monthly or annual
You’re a sophisticated, aggressive investor willing to accept substantial losses, understand leveraged characteristics & have time to manage daily position

6. WHAT ARE DOWNSIDES, “GOTCHA’s” & RISKS?
High costs- can exceed 1% fees
Huge price swings- + 50% daily performance
Volume varies dramatically + 200%
Market timing
High portfolio turnover / day
Tracking error vs underlying index
Aggressive investment techniques
Leverage- 2x to 3x plus margin until 12/1/09
Holding overnight- prices reset daily

7. WHAT ARE DOWNSIDES OR “GOTCHA’s” & RISKS? cont’d
Adverse market conditions
Risks of shorting instruments
Inverse correlation
Investing in equity securities
Investing in small and mid cap companies
Credit risk
Risks of investing in concentrated sectors, geographic concentration
May be banned by SEC or broker

8. EXAMPLE: RIFIN & FAZ (Russell 2000 financials, 3X inverse), Last 5 days, 30 days; 4h/1d Heikin candle

9. YOUR ADVICE & LEVERAGED ETF TRADER GROUP
Do you have a way(s) to identify TREND REVERSALS (ie, such as the downtrend that changed to an uptrend in March, 2009)?
Would you like information on a leveraged ETF trader group being formed? Name on clipboard.
Dec 5 meeting (If demand):
How I Trade Leveraged ETFs
Contact: Wally Eater,

10. A FEW RESOURCES (also search Google & Bing)
List of leveraged ETFs traded on US / Canada Stock Exchanges (hot links to leveraged ETF providers):
Dissecting Leveraged ETF Returns:
Leveraged ETFs: A Value Destruction Trap?
Leveraged ETF Ticker Symbols- All the 2x and 3x Return Info You Need

11. QUESTIONS