Leveraged ETFs (6 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. 

ProShares UltraShort Financials (SKF) $78.30

Profit Target (20%): $93.95  

Trailing-Stop (ATR x 2): $11.96

ProShares UltraShort Russell 2000 (TWM) $53.74

Profit Target (20%): $64.50  

Trailing-Stop (ATR x 2): $8.90

Direxion Financial Bear 3X (FAZ) $60.62

Profit Target (20%): $72.75 

Trailing-Stop (ATR x 2): $13.86

ProShares UltraShort S&P 500 (SDS) $24.22

Profit Target (20%): $29.05  

Trailing-Stop (ATR x 2): $2.94

ProShares UltraShort Oil & Gas (DUG) $33.12

Profit Target (20%): $39.75  

Trailing-Stop (ATR x 2): $4.84

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.