I built the following leveraged ETF calculator using an Excel spreadsheet to help myself and others analyze leveraged ETF funds that are leveraged against another security. This particular calculator is using WTI oil futures prices vs. UWTI, the 3x Leveraged ETF fund from Credit Suisse.
The calculator uses a starting WTI buy price and allows you to manipulate daily WTI prices for a ten period and 20 period timeframe. To understand better how the leveraged ETF funds behave all you need to do is start with a beginning and an end price for WTI that is the same and then manipulate the prices between day one and the last day. As you change the values, watch what happens to the value of UWTI on the final day.
Even thought the beginning and final price of the commodity or security being leveraged against (WTI) stays the same, the leveraged ETF, UWTI’s final value is drastically different.
An example of a Leveraged ETF stock value over time.
You can also use this calculator to look at value decay!
In the example below the commodity being traded is WTI. The yellow column values change. The starting value of the commodity is 26.5 and the final value is 35. The 10 day chart on the left gets to $35 with a final UWTI price of $2.22 and the chart on the right gets there after 20 days with a final value for UWTI of $2.35.
Depending on how you manipulate the daily prices between the beginning and the end, you can get a huge range of final values for the leveraged fund UWTI. Get out your wallet and contact me if you would like for me figure out exactly what that range is for you 😛