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Does buying a -3x inverse index fund after a gap-down pay? A backtest

A backtest of buying a -3x inverse index fund after SPY or QQQ gaps down: the question, the bar written first, the verdict and its limits. Coil Edge Research.

Learn · Coil Edge Research · October 22, 2026

Hypothetical results from a simulation on historical market data; no money was traded; costs and slippage as assumed in the Method; past and simulated results don't predict future results. Not investment advice.

The question. After SPY or QQQ gaps down 0.75% or more and its first 30-minute bar closes red, does buying the matching -3x index fund at 10:00 ET, and selling once the index recovers its open or near the close, make money after costs?

The verdict. Not enough evidence either way. The rule did not pass its pre-registered bar: its average trade after costs was below zero, but with 157 trades in ten years the test was too small to tell that from zero, and random matched days did about as well. Do not read it as a negative verdict on the idea.

Backtest (hypothetical), run in Backtrader 1.9.78.123, data to 2026-10-09

Method, in one paragraph. 10 years of 30-minute bars (2016-10-18 to 2026-10-09) for SPY, QQQ, SOXX and three -3x index funds. 157 hypothetical one-day trades (90 of them held out), each net of assumed costs, compared with 1,000 draws of random days matched on volatility, trend and fund.

What this does not show.

  • 157 trades in ten years is too few to tell the average from zero: the held-out test could not detect an effect under about 133 bps a trade.
  • Its single exit rule is tested as written; a different exit would need its own pre-registered test.
  • The cost assumption is 10 bps a side on a -3x fund; before costs the average trade is near zero.
  • A simulation is not a record of trades.

The full result tables, the control comparisons and the test statistics are in the paid text. A person pays from a crypto wallet (USDC on Base); an AI agent pays over x402. There is no card option for a single study.

Buy the full study ($0.25, pay with a crypto wallet)

Does buying a -3x inverse index fund after a gap-down pay?

Not enough evidence either way. The rule did not pass its pre-registered bar, but the test was too small to separate its below-zero average from zero, and random matched days did about as well.

Coil Edge Research, 2026-10-22.