Frequently Asked Questions
Who might want to invest in SPCM?
The Tradr 2X Long SpaceX Daily ETF (SPCM) is designed for high conviction investors who are looking for 200% long exposure to the daily performance of SpaceX common stock (Nasdaq: SPCX) SPCM 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 SPCM?
The fund 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.
How does SPCM work?
SPCM may use total return swaps and other derivatives such as options to seek two times the daily performance of SpaceX common stock. SPCM is rebalanced daily to maintain leverage and to pursue its daily performance target. There can be no assurance that SPCM will achieve its objectives.
What is the fee for SPCM?
SPCM has an annual expense ratio of 1.49%.
How can I buy or sell SPCM?
SPCM 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 SPCM?
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 SPCM?
Not yet. SPCM options are expected to begin trading within a short period after the ETF is launched.
Why might I want to trade SPCM versus options on SPCX?
There is no need to choose a strike price or expiry date when trading SPCM 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, SPCM 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?
SPCM’s end of day net asset value (NAV), seeks to deliver approximately two times the end of day (4 p.m. EST) return of SPCX. Intraday, the last sale percentage change of SPCM 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 SPCM. Those quoted prices are beyond the control of the portfolio managers of SPCM. 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% the underlying stock, even when the fund's NAV is tracking its objective closely. As disclosed in the prospectus, SPCM 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 drops by more than 50% in a trading day?
Because the Fund includes a multiplier of two times (200%) SpaceX common stock, a single day decline 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 rises or moves in an opposite direction, eliminating all or a portion of the earlier decline.
What happens if I hold SPCM for more than one day?
SPCM 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 SPCM own shares of SpaceX?
SPCM primarily uses swaps and other derivatives such as options to obtain leveraged exposure to SpaceX stock. However, at times it may be advantageous for SPCM shareholders for the fund to directly hold a small portion of its assets in SPCX.
What are the primary risks of investing in SPCM?
SPCM is a leveraged 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. Before investing, carefully review the fund's prospectus and risk disclosures.
Can I lose more money than I invest in SPCM?
No. Your losses are generally limited to the amount you invest in the fund. However, because SPCM is a leveraged ETF, you could lose a substantial portion or even all of your investment in a short period of time.
What is the difference between SPCM and buying SpaceX stock on margin?
Both strategies seek to increase exposure to SpaceX stock, but they work differently. Margin investing involves borrowing money from your broker and may require additional funds to be deposited if the value of your position declines. SPCM provides leveraged exposure in a single ETF wrapper and does not require investors to maintain a margin account or meet margin calls.
What happens if trading in SpaceX stock is halted?
If trading in SpaceX stock is halted, SPCM 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 SPCM 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 SPCM trade at a premium or discount to NAV?
Like all ETFs, SPCM'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 SPCM?
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.
