Leveraged ETFs (31 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 Small Cap Bull 3X (TNA) $49.25

Profit Target (20%): $59.10  

Trailing-Stop (ATR x 2): $11.66

ProShares Ultra Basic Materials (UYM) $39.98

Profit Target (20%): $48.00  

Trailing-Stop (ATR x 2): $5.60

Direxion Technology Bull 3X (TYH) $34.49

Profit Target (20%): $41.40  

Trailing-Stop (ATR x 2): $6.32

Direxion Large Cap Bull 3X (BGU) $58.87

Profit Target (20%): $70.65 

Trailing-Stop (ATR x 2): $10.52

ProShares UltraPro S&P 500 (UPRO) $57.18

Profit Target (20%): $68.65  

Trailing-Stop (ATR x 2): $9.86

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.