Since circuit breakers don’t seem to work premarket, can a triple leveraged fund like UPRO go to zero?
There is indeed a 5% circuit breaker/limit up/down in premarket, we're currently limit down FYI. The S&P futures can't drop more than 5% until the regular session open.
UPRO tracks the S&P 500 index, not an ETF that tracks the S&P 500 index (SPY), right? Have you taken a look at their holdings in their prospectus?
But the SPY is basically the same as the SPX. a few days ago the SPY was down about 9% pre market. So if the SPY is at -25% at 9:29 won’t the SPX be there as well resulting in market being shut for the day? Since it exceeded the 20% ? Thanks for replying.
No, it's not the same at all when it comes to premarket vs regular market and circuit breakers. The SPY premarket may presage a fall in the real, regular hours S&P 500, but it may very well not. All that matters for the 20% circuit breaker is what happens in regular session. And if you look at the UPRO prospectus, I'm dead certain you'll find nothing they hold is indexed to premarket traded securities. So back to your original question, UPRO at most can go down 60% per day per 3x the market trading halt. And don't forget, it tracks 3x the DAILY return. That daily return distinction is crucial. Although obviously if the market is locked limit down they will have a hard time rebalancing and probably stop tracking the index accurately.
Wow thanks. One more. Can the regular market open down more than 20% and get immediately halted? I e can it open 33% down?
I suppose it could, not sure if they'd bust the one trade that took it below 20% or not. @FSU might know?