Frequently Asked Questions
Who might want to invest in SPCG?
The Tradr 2X Short SpaceX Daily ETF (SPCG) is designed for high conviction investors who are looking for -200% inverse exposure to the daily performance of SpaceX common stock (Nasdaq: SPCX). SPCG should only be used by knowledgeable traders and active investors who understand the risks of leveraged ETFs for short-term or intraday trading.
Who should not invest in SPCG?
The Tradr 2X Short SpaceX Daily ETF is not suitable for investors who do not actively monitor or manage their portfolios or for investors looking for a long-term investment in SpaceX common stock. It is also not suitable for investors who have a bullish outlook on SpaceX stock.
How does SPCG work?
SPCG may use total return swaps and other derivatives such as options to seek two times the inverse (-200%) of the daily performance of SpaceX common stock. SPCG is rebalanced daily to maintain leverage and to pursue its daily performance target. There can be no assurance that SPCG will achieve its objectives.
What is the fee for SPCG?
SPCG has an annual expense ratio of 1.49%.
How can I buy or sell SPCG?
SPCG is listed on the Cboe, one of the three major U.S. stock exchanges. Check with your financial advisor or online broker to see if SPCM is available to trade on their platform.
What type of order should I use when trading SPCG?
While a limit order is the most conservative route, it may take longer for your order to get executed. If you have specific questions about a larger order size, please call your financial advisor or the trading desk of your online brokerage platform.
Can I trade options on SPCG?
Not yet. SPCG options are expected to begin trading within a short period after the ETF is launched.
Why might I want to trade SPCG versus options on SPCX?
There is no need to choose a strike price or expiry date when trading SPCG as ETFs do not have an expiry date. Therefore you don't need to worry about rolling your position. In addition, while leveraged ETFs generally have a daily reset, there is no theta or time decay which is a characteristic of options. Lastly, SPCG consistently seeks -2x leverage. With options, your effective leverage, or delta, is constantly shifting.
Why might a leveraged ETF not track its underlying stock at -200% throughout the day?
SPCG's end of day net asset value (NAV) seeks to deliver approximately negative two times (-200%) the end of day (4 p.m. EST) return of SPCX. Intraday, the last sale percentage change of SPCG may not necessarily reflect -2X the last sale percentage change of SPCX. It is the various liquidity providers, including market makers, who are responsible for posting bids and offers on SPCG. Those quoted prices are beyond the control of the portfolio managers of SPCG. In addition, while we manage the fund's exposure to target -2X SPCX's daily performance, the ETF's closing market price can trade at a premium or discount to NAV based on supply and demand at the time of market close.
As a result, intraday price movements may differ from exactly -200% of the underlying stock, even when the fund's NAV is tracking its objective closely. As disclosed in the prospectus, SPCG seeks to achieve its investment objective on a daily basis and should not be expected to provide exactly -2X the performance of SPCX over periods shorter or longer than a trading day.
What would happen if the price of SPCX rises by more than 50% in a trading day?
Because the Fund includes a multiplier of negative two times (-200%) SpaceX common stock, a single day increase in SPCX approaching 50% at any point in the day could result in the total loss of an investor's investment if that movement is contrary to the investment objective of the Fund, even if SpaceX subsequently declines or moves in the opposite direction, eliminating all or a portion of the earlier gain.
What happens if I hold SPCG for more than one day?
SPCG seeks -200% of the daily performance of SpaceX stock. Because the fund resets its leverage daily, returns over periods longer than one day can differ significantly from -200% of the stock's return for the same period, particularly during volatile or trending market conditions.
Does SPCG own shares of SpaceX?
SPCG primarily uses swaps and other derivatives such as options to obtain inverse leveraged exposure to SpaceX stock. However, at times it may be advantageous for SPCG shareholders for the fund to directly hold a small portion of its assets in SPCX.
What are the primary risks of investing in SPCG?
SPCG is a leveraged inverse ETF and can be significantly more volatile than SpaceX stock itself. Investors may lose money rapidly, including a substantial portion of their investment in a single trading day. If SpaceX stock rises sharply, SPCG is expected to decline in value. Before investing, carefully review the fund's prospectus and risk disclosures.
What is the difference between SPCG and shorting SpaceX stock?
Both strategies seek to profit from declines in SpaceX stock, but they work differently. Short selling involves borrowing shares, paying borrowing costs, and potentially facing unlimited losses if the stock rises significantly. SPCG provides inverse leveraged exposure in a single ETF wrapper and does not require investors to borrow shares or maintain a margin account to establish a short position. However, investors can still lose their entire investment in SPCG.
What happens if trading in SpaceX stock is halted?
If trading in SpaceX stock is halted, SPCG may be unable to accurately price its holdings or rebalance its portfolio, especially if the halt is not lifted by the close of the trading day. In certain circumstances, trading in SPCG may also be halted. Please see the prospectus for additional information regarding trading halts and other market disruptions
How is the fund's NAV calculated?
The fund's Net Asset Value (NAV) is calculated at the end of each trading day by taking the total value of the fund's assets, subtracting liabilities and expenses, and dividing by the number of shares outstanding.
Why might SPCG trade at a premium or discount to NAV?
Like all ETFs, SPCG's market price is determined by supply and demand and can differ from its NAV. As a result, shares may trade at a premium (above NAV) or a discount (below NAV), particularly during periods of market volatility or when bid-ask spreads widen.
What is the best time of day to trade SPCG?
While some brokerage platforms allow ETFs to be traded outside of regular trading hours, investors prefer to trade ETFs during normal market hours, soon after the market has opened, and during the final minutes of trading, when liquidity is often greater and bid-ask spreads may be narrower. Investors should consult their financial advisor regarding the trading strategy that is appropriate for their circumstances.
What is volatility decay and how does it affect returns?
Volatility decay refers to the impact that daily compounding can have on the returns of leveraged ETFs over periods longer than one day. In volatile markets, a leveraged ETF's return may differ significantly from the stated multiple of the underlying stock's return for the same period, particularly when prices fluctuate up and down.
How do leveraged ETFs behave in high volatility markets?
Leveraged ETFs are typically more sensitive to market movements than the underlying stock itself. During periods of high volatility, daily compounding can cause returns over periods longer than one day to differ significantly from the fund's stated leverage multiple. As a result, performance can be highly dependent on both the direction and volatility of the underlying stock's price movements.
