Inverse ETFs short can short stocks as well as utilize options and other derivatives, swap agreements, and/or futures contracts.
Italy's three month ban of short selling applies to stocks. If it's no more than that, the ETF may be able to continue doing business as usual, depending on the MO of their prospectus.
When the US banned the shorting of 100 or ...
I cannot provide any sources and am just guessing.
The ETF you talk about is located in Ireland. That has two effects:
If you would sort it, the Italian regulation seems only to affect Italian stocks.
But you don't short it, but hold it as a long position.
So you are not affected.
Is the ETF affected? Maybe - once short selling is banned in Ireland as ...
You gain 30% compared to the index - here's why:
Let's say the stock is trading for $10 and its benchmark index is at $100. You put a $1,000 short trade on the stock (short 100 shares).
The stock goes down to $8 and the index to $90. Your short position is now worth $1,200 (you gain 100*$2 = $200) for a 20% gain and the index has a 10% loss, so relative to ...
In 2008, the temporary ban on shorting was restricted to financial stocks.
For the most part, only a halt in the stock or a halt in the market (like today) prevents you from being able to cover a short position. There have been a very small number of situations where it was almost impossible to buy to cover.
The classic example often cited is the ...
why isn't 'everyone' short VXX?
Shorts can be forcibly closed by the lender under certain conditions. Given this, then if VXX spikes upwards, you could get wrecked. So even if you are 100% sure that the price will drop eventually, there is still short-term risk.
Additionally, there is only so much liquidity in the market for any action. As you reach this ...
Here's a PSA, and a short answer.
PSA: Please don't trade things that you don't understand. That's rule #1. Not that you're doing that. You're trying to educate yourself, I can see that clearly. This is directed at anyone else that comes across this post.
Short Answer: Think of buying VXX like buying insurance on the stock market. Like other forms of ...