Leveraged ETFs (25 Jul 11)

TO ALL:

Here are the “potential trades” for next week:

Leveraged ETFs

A Leveraged ETF offers the investor a simple way to buy a broad index or sector with double or triple the exposure of the underlying index. A Leveraged ETF will allow investors to put a leveraged bet on either side of the market, long or short.  This means that you can buy a 2x or 3x bearish ETF which will increase when the market heads south; these are commonly referred to as inverse leveraged ETFs.  Conversely, you could buy a 2x or 3x bullish fund which will increase when the market moves higher.  These instruments are particularly useful for gaining exposure to the bearish side of the market in a rollover IRA or traditional IRA, where margin and short selling are restricted.

PowerShares DB Gold Double Long (DGP) $53.69

ProShares Ultra Oil & Gas (DIG) $61.05

Direxion Energy Bull 3X (ERX) $85.20

ProShares Ultra QQQ (QLD) $96.00

ProShares Ultra Silver (AGQ) $217.92

Trading leveraged ETFs comes with a significant amount of risk, especially if the market begins moving against you. This is why advisers recommend using a stop loss order.  A trailing stop  causes a stock to be sold if it falls a particular dollar amount from the most recent high.

All positions displayed are for educational purposes only and are not intended to be recommendations.