Comparing deltas on leveraged ETFs

[mcjon3z]

I'm trying to wrap my head around comparing delta's on leveraged vs. non-leveraged ETF's (for example QQQ vs. TQQQ) in order to try to achieve a target delta on a non-leveraged version. Basically I want to duplicate a risk/reward profile on a spread in TQQQ using QQQ because of the vast liquidity difference between the 2.

 

Let's say for simplicity's sake that QQQ is trading at $300 and TQQQ is trading at $150. If the Nasdaq goes up 1%, then theoretically QQQ should go up $3 (1%) and TQQQ should go up $4.5 (3%). So an option with delta of .1 in QQQ would have the same $ gain as a delta of .066 in TQQQ (3x leverage movement / 2 since the underlying security cost is half as much).

 

Am I thinking about this correctly?

Edited August 27, 2020 by mcjon3z