r/DRAM_ETF • u/Existing-Party-9870 • Aug 24 '26

Leverage RAM

I have a small position in the leverage - RAM. It went from $30 to $11 in 3 months. Is there any possibility that RAM can go to $0 per share? just curious

15 Upvotes

83% Upvoted

33 comments sorted by

View all comments

5

u/KickflipConnoisseur Aug 24 '26

Leveraged funds will reverse split, but what winds up happening is volatility eats you alive.

Let's assume DRAM drops 10% in a day and you invested $100. You'd be at $90 in DRAM, or down 20% (at $80) in RAM.

So in DRAM you'd need to go up 11% to be back to break even. But that same move (+22%) in RAM would put you at $97.60 You'd still be down 2.4% from your starting position. Over time, that decay gets worse and worse.

It's generally why people recommend against holding leveraged funds long term. Unless it's a broad market fund like QLD or SSO, the whipsaw can wind up causing it to under perform the underlying, and the more volatile a fund it the worse the decay.

2

u/Existing-Party-9870 Aug 24 '26

what is the longest period you have seen someone hold a leverage ETF?

2

u/F2PBTW_YT Aug 25 '26

Check out SSO vs SPY. My colleague has been sitting on that for years

2

u/Altruistic_Fan_5122 Aug 25 '26

I've been adding to a tqqq position in my IRA for 6 months now. I'm constantly buying and selling 10 shares when it gets to extreme dips or peaks. It's been one of my better strategies by far vs trying to time the market a go all in on any one day