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Strategies & Market Trends : Take the Money and Run

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To: chris714 who wrote (8618)	7/16/2002 12:48:25 AM
From: OpenSea	Read Replies (1) of 17639

Chris--The ProFunds don't have time decay, per se, but rather a decay related to the volatility of the indexes to which they are related. For example, for ease of example, the ProFund UOPIX, which doubles the NDX in the long direction. Suppose the NDX is at 1000 and drops 25%. It would now be at 750. UOPIX would drop 50% and be at 500. Now suppose the NDX moves up 33%. It would go from 750 to 1000. The UOPIX would go up 66%, which would mean it would be at 830...17% lower than it was last time the NDX was at 1000. So, in a nutshell, that is the reason for the decay on the 2x funds...On the other hand, if there is a strong and sustained movement in one direction, the 2x funds can outperform the indexes by more than 2x...

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