Exchange-traded funds (ETFs) are excellent trading vehicles that allow investors to easily play whole sectors, indexes, or individual commodities. ETFs may be structured like mutual funds, but are bought and sold like stocks.
Inverse ETFs enable one to place a bearish bet, effectively going “short” without having to borrow shares, as you would with stocks. Another advantage of inverse ETFs is that the downside risk of going long on the “short” is finite, meaning you can only lose your initial investment. The potential loss from shorting a stock is theoretically unlimited.
Leveraged ETFs are designed to replicate twice the expected gain or loss of the underlying commodity, index, or basket of equities. Large moves in the markets like those of the past few days create opportunities for leveraged ETFs to realize massive gains. FXP, for example, returns approximately twice the inverse (i.e., double short) of the China FXI index, and gained 26.3% on the day. The list below, while not comprehensive, includes some of the more useful leveraged ETFs with today’s returns.
Double (2X) SHORT
QID: Nasdaq; +10.3%
SDS: S&P 500; +8.7%
DXD: Dow; +8.0%
TWM: Russell 2000; +10.3%
DUG: oil and gas stocks; +4.2%
SKF: financials; +14.4%
SRS: real estate; +9.5%
RXD: health care; +2.2%
SMN: basic materials; +4.7%
SSG: semiconductors; +7.4%
SDP: utilities; +9.6%
FXP: China (FXI); +26.3%
EWV: Japan; +7.6%
EEV: emerging markets; +13.4%
DTO: oil (Exchange-Traded Note); -4.8%
DZZ: gold (ETN); -19.2%
AGA: agricultural commodities (ETN); -6.7%
Double (2X) LONG
QLD: Nasdaq; -10.0%
SSO: S&P 500; -8.5%
DDM: Dow; -7.9%
UVT: Russell 2000; -9.4%
DIG: oil and gas stocks; -4.6%
UYG: financials; -15.1%
URE: real estate; -10.6%
RXL: health care; -5.6%%
UYM: basic materials; -8.1%
USD: semiconductors; -5.9%
UPW: utilities; -10.5%
DXO: oil (ETN); +6.5%
DGP: gold (ETN); +24.6%
DAG: agricultural commodities (ETN); +6.3%
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