Theoretically, exchange traded funds (ETFs) are treated the same way as securities, but in practice shorting them is difficult. Since trading volume is smaller for ETFs vs. liquid stocks, brokerage houses may not have shares available to lend to a short-selling customer. Jesse Emspak for Investor’s Business Daily reports that many individual investors trade via online brokerages which often say the short sell just can’t be done. Only a full-service broker can do that.
ProShares launched short ETFs last year to help with this problem. Among their offerings are the Ultra Short QQQ (QID) and Ultra Short S&P 500 (SDS). These give investors the opportunity to go short in one ETF.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.