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Dave Nadig
3:13
Commodities, while having a special place in my heart, are still a pretty niche asset class.
So I think it's unlikely we get a huge rush of new competitors unless we have a huge run in commodities as a broad basket.
3:14
Graniteshares is clearly in the fee competition business, so if Vanguard started offering up the new fund in an ETF (I'm not clear on whether they are right now), then I would expect them to respond.
3:15
As for new indexes - the BB is pretty much the second standard after the GSCI, and everything else is some form of smart beta really - managing tenors or using signals to pick the individual commodities.
Some of these like USCI have had their moments in the sun, but it gets pretty nichy pretty fast.
3:16
(On Cannabis, several of you pointed out I missed CNBS!!!  Which is what I get for going on vacation for a week!)
So 5 Cannabis ETFs!!!
Todd Rosenbluth - CFRA Research
3:16
Hi Dave. How do you think ETF investors should track earnings season? MSFT or AMZN can be pretty big weights in many ETFs, particularly sector or style ones, but some investors are buying and holding for the longer term.
Dave Nadig
3:17
Well, the honest truth (which I am going to guess you agree with Todd!) is that if you're a long term investor, you should mostly ignore Earnings Season.
Any information from earnings gets priced in essentially instantly - certainly before an individual investor can "trade" on it somehow.
3:18
Which means if TSLA gets slammed, it will go down in your portfolio, whether you're in SPY or RVRS.
At least on that day.
But, the bigger issue of course is just minding your concentration.  Yes, firms like AMZN and AAPL are a HUGE part of some major indexes.
3:19
The good news is it's pretty easy to monitor at least one fund at a time.  If you go to https://www.etf.com/SPY, you can see what it holds.
And if you're curious you can go the other direction too:
and see who owns how much of something.
In general, the more narrow the fund, the bigger issue this can be: Google shares are now something like 25% of the communications ETFs, for example.
Marshall T.
3:20
Why are silver ETFs suddenly so attractive?
Dave Nadig
3:21
So I see Silver as sort of a "bridge metal."  It still gets lumped in as a precious metals play and all that entails (inflation hedge, guns-and-butter panic store of value, all that), but at the same time, Silver actually gets used a lot more in industrial applications and is less tied to the vagaries of things like the Indian wedding season.
3:22
More recently, Silver lost some of its connection to Gold -- so this can be seen as a bit of a rubber-banding back to how gold's been doing, Mario Kart style.
I think that's really it.
OK, last question, and it's a doozy:
Nemo
3:22
Is there any connection between the price of traditional leverage and the price for implicit leverage through options? If so what is the mechanism of transference?
Dave Nadig
3:22
OK, strap in, because this isn't the simplest answer.
3:23
So first off, buying options inherently involves some leverage.  If the call option on a $100 stock is (making things up) $5, well, you need to know a few more things.
the first is the Delta of the option
The Delta is the ratio of a price move in the underlying to a price move in the option price itself
3:25
So, if the Delta of our option is, say. .5, then we can say that the implied leverage is .5, times the price of the stock (so, in this case, $50), and then divide that by the price of the option itself, to get your implied real leverage
So the math would come to 10, or 10X implied leverage here.
So thats where you start.
The second part here is how that ties to interest rates.
3:26
All else equal, call options get more valueable because of this leverage.
So in this case, since we know our option has a 10X implied leverage, for a $10,000 notional exposure, we can stick $9,000 in somethign ELSE, and let our $1000 option position do the work.
If were in a high interest rate environment, you make more parkign that 9K
3:27
(and in lower interest rate environments, that becomes less attractive).
Puts essentially have the opposite for the same reasons.
3:28
THen, last (and yeah, this is a firehose), there is a greek measurement for how interest rate sensitive a given option position is, which is (and boy I hope I'm remembering this right) Rho.
It tells you in dollar terms (if I'm remembering right) the price movement in the option for a 1% move in interest rates.
3:29
Rho/Delta (and all the other greeks) are something you should really learn if your going to trade options regularly, and it goes WAY beyond what im covering here.
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