Why Would You Trade ETF's?

[alutixusini]

Hey equities traders.

Why would you trade ETF's?

They have bundled fees.

They don't reflect the true value of the underlying in most cases.

Futures have the IRS Section 60/40 rule and you pay less taxes.

Liquidity is better and spreads tighter in many cases.

Leverage is better.

You can trade them 24 hours when you are stuck in an equity product if you are stuck overnight..

Why?

[Annaea]

a number of reasons.. some people would rather play with equities than options. biggger gains also have bigger losses, also there are obligations involved

[AndyAlino]

I trade ETF's for two reasons; either

a) it's easier than directly trading the commodity eg. DBA, IAU

b) it spreads the risk versus individual stocks in a risky sector eg. IBB (biotech).

I trade and/or invest in plenty of individual biotech stocks but after much discussion with my wife, decided not to convert my office into a soy bean silo!

Btw - tell me DBA is not an absolutely beautiful chart and you wish you'd owned it!! (bought in early october - took some off the table already).
Granted you could have played some agg stocks for the same or better gain but this is the pure play on the commodities.

[Anthonypt]

they have bundled fees eh?

I guess then you would make some money by shorting the ETFs and buying the underlying.

But that doesn't exactly work, does it?

[aqaqayi]

I guess then you should short the ETFs, buy the underlying, and make the "fees" yourself.