Leveraged ETFs (8 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. 

ProShares UltraShort Basic Materials (SMN) $22.16

Profit Target (10%): $24.40  

Trailing-Stop (ATR x 2): $2.04

ProShares UltraShort Russell2000 (TWM) $54.45

Profit Target (10%): $59.90  

Trailing-Stop (ATR x 2): $4.66

Direxion Small Cap Bear 3X (TZA) $51.00

Profit Target (10%): $56.10  

Trailing-Stop (ATR x 2): $5.96

Direxion Large Cap Bear 3X (BGZ) $45.32

Profit Target (10%): $49.85  

Trailing-Stop (ATR x 2): $5.96

ProShares UltraShort Financials (SKF) $77.21

Profit Target (10%): $84.95  

Trailing-Stop (ATR x 2): $6.02

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.