Leveraged ETFs (22 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. 

PowerShares DB Gold Double (DGP) $69.14

Profit Target (20%): $83.00  

Trailing-Stop (ATR x 2): $4.02

VelocityShares Daily 2x VIX ST (TVIX) $59.94

Profit Target (20%): $71.95  

Trailing-Stop (ATR x 2): $11.94

ProShares UltraShort Basic Materials (SMN) $24.07

Profit Target (20%): $28.90 

Trailing-Stop (ATR x 2): $3.02

ProShares UltraShort Russell 2000 (TWM) $60.69

Profit Target (20%): $72.85  

Trailing-Stop (ATR x 2): $7.92

ProShares Ultra Silver (AGQ) $241.57

Profit Target (20%): $289.90  

Trailing-Stop (ATR x 2): $28.02

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.