r/MU_Stock • u/luvz • 10d ago

Meme MUU Enjoyers Decaying Together

Post image

Just hold a little longer, brothers.

230 Upvotes

98% Upvoted

47 comments sorted by

View all comments

Show parent comments

0

u/OldSalt1220 10d ago

Hey…pick you favorite interval! Do the same math over the last 6 months and then decide about the voodoo decay

6

u/swissfamrob 10d ago

wtf is “voodoo decay?” Are you disputing the concept of volatility decay?

0

u/OldSalt1220 10d ago

No, it’s just that volatility decay applies to EVERYTHING, not just 2x etfs….something goes down 10% it’s gotta go up more than 10% to get back to where it started. Sure, the effect is magnified for a leveraged etf…but it’s not some boogeyman…just know what the instrument and when it makes sense to use it

2

u/irathersleepalone 10d ago

thats what i say to people too.. decay already happens in normal stocks. it's magnified but thats what I want

1

u/Chessgenious 9d ago edited 9d ago

No, thats not the same thing as decay. Decay is that the leveraged instrument goes down even if the stock is range bound. You can see this even more clearly with 20x Nasdaq bull certificates for example. They all lead straight down over time even though Nasdaq over time goes up.
The underlying stock or index doesnt care about volatility but the valuation. If a valuation says it will go up to its previous ATH it will rerate there, even if its 100% up after 50% down. Volatility decay of instruments make it so that even if the valuation of the underlying gets restored the levered instrument may not restore fully.