Kelly Capital is proud to announce on Friday the 13th the world’s first pair of 100x leveraged ETFs: Kelly Daily Nasdaq 100 Bull 100x Shares (SOAR) and Kelly Daily Nasdaq 100 Bear 100x Shares (SINK). The investments seek to replicate, net of expenses, 10,000% of the daily performance of the Nasdaq 100 Index in the case of SOAR, and 10,000% of the inverse daily performance in the case of SINK. The funds will invest at least 80% of assets in securities that comprise the index. They will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The funds are nondiversified.
“These are intended for attentive traders only,” said Kelly Capital Chief Executive Officer Jason Kelly at the press conference following the launch party in New York City. “The extreme leverage employed will cause both funds to go bankrupt within the course of most trading days. However, those paying attention during the day will be able to maneuver in and out of the funds before they crash to zero.”
Kelly Capital will reset and relaunch the funds at the beginning of each trading day. The company is in talks with the Security and Exchange Commission (SEC) about the possibility of relaunching the funds after lunch should they go bust in the morning session, but the SEC is balking. SEC spokesperson Ben Meriwether remarked, “We recognize the right of investors to employ as much leverage needed to find fortune or ruin in a day, we just aren’t sure of the need to extend that right twice per day.”
Kelly thinks the SEC will come around to his firm’s way of thinking on the issue, but is happy for now that investors will have access to the funds at least once per day. “Investors these days aren’t content to wait years for returns on their investment. They want to know the outcome as quickly as possible, and at 100x leverage our products currently offer the fastest investment outcomes.”
Connecticut-based investment research firm Evanescent Lucre monitored a paper trade in SOAR during yesterday’s market. From its report: “On Thursday, November 12, 2009 the Nasdaq 100 Index fell 0.17% in the first 10 minutes, rose 0.62% in the next 20 minutes, fell 0.45% in the next 20 minutes, rose 0.28% in the next 30 minutes, and fell 0.61% in the next 40 minutes. On that same path in the market’s first two hours, SOAR fell 17%, rose 62%, fell 45%, rose 28%, and fell 61%. By 11:30 a.m., a $10,000 investment was worth just $3,692.”
Asked to respond, Kelly reiterated that timing was critical. “Getting out after that first 62% rise was the key, in this example, and people savvy enough to use our products are likely to know that.”
Kelly said in addition to quick results, the new ETFs offer two fringe benefits: a shorter trading day for most who use them because the action will be over before lunch, and excellent tax write-offs at the end of year for those who realize they need them. “We’re focused on families, and shorter trading days gives traders more time to spend with their families. The instant tax write-off feature is very useful in the last trading days of the year when some people realize they need an efficient way to vaporize some of the year’s profits.”
Kelly Capital has filed with the SEC to grow the line of products to cover other indexes and asset classes at 100x leverage. “However,” Kelly noted, “once the leverage gets high enough, you really don’t need a wide range of products because any underlying index will produce the tiny amount of fluctuation needed to move the product price. Traders won’t care whether the slim 1.00% band of possibility they have to work with comes from the Nasdaq 100, the Nikkei 225, or the Dow. It’s all just movement, after all.”
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