Sunday, August 28, 2011

Leveraged ETFs (29 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. 

VelocityShares Daily 2x VIX ST (TVIX) $55.54
Profit Target (20%): $66.65  
Trailing-Stop (ATR x 2): $14.24

PowerShares DB Gold Double (DGP) $67.31
Profit Target (20%): $80.80  
Trailing-Stop (ATR x 2): $5.60

ProShares Ultra Silver (AGQ) $224.30
Profit Target (20%): $269.20  
Trailing-Stop (ATR x 2): $32.20

Direxion Emerg Mkts Bear 3X (EDZ) $23.86
Profit Target (20%): $28.65 
Trailing-Stop (ATR x 2): $4.34

ProShares UltraShort Crude Oil (SCO) $57.76
Profit Target (20%): $69.30  
Trailing-Stop (ATR x 2): $7.94

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.

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