Q: What is a Leveraged ETF? What is the difference between a Leveraged ETF and a traditional ETF?
A: A Leveraged ETF is an innovation on the traditional ETF. As the name suggests, the main difference is that the Leveraged ETF can utilize leverage. If the leverage applied is 1, the Leveraged ETF is in fact equivalent to a traditional ETF.
Q: What is the Leveraged ETF subject to?
A: The current Leveraged ETF product tracks the value of BTC. In the future, we will launch Leveraged ETF products featuring other popular digital assets where appropriate.
Q: What assets can be used to purchase RightBTC’s Leveraged ETF?
A: The Leveraged ETF can be purchased with USDT.
Q: What are the benefits and drawbacks of a Leveraged ETF?
A: The return from the Leveraged ETF product is calculated on a daily basis. Leverage is more suitable for short-term trading and hedging strategies. When traders have a clear strategy regarding market trends or need to manage risk exposure, they can use the Leveraged ETF to execute this strategy. As leveraging enlarges basic returns, it also magnifies risk and thus the potential loss is magnified accordingly.
Q: What are the similarities and differences between Leveraged ETFs and futures contracts?
A: Similar to the leveraging capabilities of futures contracts, Leveraged ETFs are financial derivatives with a leverage effect. However, as compared with futures contracts, Leveraged ETFs entail no need for margins and no risk of losing the position (risk warning: If the position is judged wrongly, there will be a risk that the balance drops to zero during extreme market fluctuations).
Q: What are the transaction fees for the Leveraged ETF?
A: The transaction fees for trading Leveraged ETFs on RightBTC are: Taker 0.2%, Maker 0.1%. At the same time, for each leverage multiple RightBTC will charge a daily 0.1% overnight management fee.
For the first month of the Leveraged ETF launch, the overnight management fee will be 0.
Q: For which kind of trader is the Leveraged ETF suitable?
A: As compared with the traditional ETF, the Leveraged ETF is more suitable for short-term trading. Moreover, the Leveraged ETF is particularly suitable for traders who have identified market trends and do not want to bear the risk of liquidation. Due to the existence of management fees and the nature of the Leveraged ETF product itself, it can be subject to significant losses in a volatile market.
Q: What is net value of the Leveraged ETF?
A: The initial net value of the ETF is 1, and the asset price will be anchored to the ETF at launch.
One day represents one cycle (From 00:00 to 00:00 of the following day), where n is the number of days (n = 0,1,2,3...), and (tn) represents the close of the nth day.
S (0) = net value of the initial ETF
S (t) = net value of the ETF at moment t
P is the asset price of the object, P (0) = initial asset price, P (t) = asset price at the moment t
Leverage factor is 3, - 3
R is the Rate of Return.
Rp (n) is the return on underlying assets on the nth day
Rp (n) = [P(tn)-P(tn-1)]/P(tn-1)
Rs (n) represents the return on fund assets on day n
Rs (n) = Rp (n)*3 or RS (n) = RP (n) * - 3 (positive and negative magnification of return rate)
Calculation of returns at moment v on nth day:
Returns from trades within one day will be settled according to the changes on that day. Returns into the next settlement cycle will be calculated according to the return of leverage ratio.