Leveraged ETFs (16 Aug 11)

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. 

Direxion Energy Bull 3X (ERX) $52.81

Profit Target (20%): $63.40  

Trailing-Stop (ATR x 2): $12.12

Direxion Small Cap Bull 3X (TNA) $48.84

Profit Target (20%): $58.60  

Trailing-Stop (ATR x 2): $12.06

Direxion Emrg Mkts Bull 3X (EDC) $24.53

Profit Target (20%): $29.45  

Trailing-Stop (ATR x 2): $5.28

Direxion Large Cap Bull 3X (BGU) $58.69

Profit Target (20%): $70.45  

Trailing-Stop (ATR x 2): $11.02

ProShares UltraPro S&P 500 (UPRO) $56.60

Profit Target (20%): $67.95  

Trailing-Stop (ATR x 2): $10.22

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.