Anytime there’s a hiccup in the market, ETF investors look for ways to protect themselves on the downside. Last week, the market volatility index (VIX) closed at 22.96, its highest level since Sept. 17. A similar index, the Nasdaq-100 volatility index (VXN) rose to 25.94, reports Yvonne Ball for The Wall Street Journal. Profit reports and rising oil prices brought concerns about where the economy is headed. The Dow Jones industrial average lost 4.1% for the week, while the S&P 500 fell 3.9%, and the Nasdaq dropped 2.9%.

With the markets looking a little rough lately, many investors are doing heaving trading of November put options on ETFs such as the PowerShares QQQ (QQQQ), which tracks the Nasdaq-100 Index. Another way to take advantage of downturns in the markets is through short and ultrashort ETFs. These ETFs, mainly offered by ProShares, seek to give investors the inverse performance of market benchmarks. They tend to have high expense ratios, so beware that these don’t eat up the returns. Also remember that when the market heads up, these ETFs will head down, that’s just how they work. The "ultra" provides the double opposite of what the market is doing. One example is the ProShares UltraShort S&P 500 (SDS). Currently, SDS is down 7.4% year-to-date.

Tags: Dow Jones Industrial Average, NASDAQ

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