Leveraged ETFs (12 Sep 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 (TVIX) $67.83

Profit Target (20%): $81.40  

Trailing-Stop (ATR x 2): $15.18

PowerShares DB Double Long (DGP) $69.85

Profit Target (20%): $83.85  

Trailing-Stop (ATR x 2): $6.50

ProShares UltraShort Dow30 (DXD) $20.41

Profit Target (20%): $24.50 

Trailing-Stop (ATR x 2): $2.20

ProShares UltraShort Financials (SKF) $80.73

Profit Target (20%): $96.90  

Trailing-Stop (ATR x 2): $12.42

Direxion Emerg Mkts Bear 3X (EDZ) $23.98

Profit Target (20%): $28.80  

Trailing-Stop (ATR x 2): $4.60

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.