Hi all,
I've been watching this ETN called DEUR for a week and it has shot up.
Here's the brief info with a link to its prospectus: http://www.velocitysharesetns.com/deur
I haven't traded ETN before and am trying to figure out the risks as well as the rewards. It's 4 times leveraged so I think I have to be extra cautious...
A quick Google research gave me the following link:
https://www.forbes.com/sites/rickferri/2012/07/12/investors-warned-about-etn-risks/#42b20f94b113
And here are seven risks unique to ETNs:
But how can I calculate the real risks with some numbers? e.g. if I want to invest $100k in this particular ETN, and I expect the USD to keep going up big time(e.g. let's say I expect the USD index would hit 100 by the end of this year), how can I calculate the potential reward and potential risks with numbers?
Any help would be greatly appreciated!
Ken
I've been watching this ETN called DEUR for a week and it has shot up.
Here's the brief info with a link to its prospectus: http://www.velocitysharesetns.com/deur
I haven't traded ETN before and am trying to figure out the risks as well as the rewards. It's 4 times leveraged so I think I have to be extra cautious...
A quick Google research gave me the following link:
https://www.forbes.com/sites/rickferri/2012/07/12/investors-warned-about-etn-risks/#42b20f94b113
And here are seven risks unique to ETNs:
- Credit Risk: ETNs are unsecured debt obligations of the issuer.
- Market Risk: As the value of an index changes with market forces, so will the value of the ETN in general, which can result in a loss of principal for investors.
- Liquidity Risk: Although ETNs are exchange-traded, a trading market may not develop.
- Price-Tracking Risk: Investors should be wary of buying at a price that varies significantly from closing and intraday indicative values.
- Holding-Period Risk: Some leveraged, inverse and inverse-leveraged ETNs, are designed to be short-term trading tools, and the performance of these products over long periods can differ significantly from the stated multiple of the performance (or inverse of the performance) of the underlying index or benchmark during the same period.
- Call, Early Redemption and Acceleration Risk: Some ETNs are callable at the issuer's discretion.
- Conflicts of Interest: The issuer of the notes may engage in trading activities that are at odds with investors who hold the notes (shorting strategies, for instance).
But how can I calculate the real risks with some numbers? e.g. if I want to invest $100k in this particular ETN, and I expect the USD to keep going up big time(e.g. let's say I expect the USD index would hit 100 by the end of this year), how can I calculate the potential reward and potential risks with numbers?
Any help would be greatly appreciated!
Ken
