Although the markets have been reaching new highs lately, there may be some bears who feel the markets and exchange traded funds (ETFs) are going to turn south. Some creative ETFs on the market allow one to harness the downward spiral in a way that’s lucrative to them. Stockerblog on Seeking Alpha reminds investors that they can short stocks or ETFs, buy put options or the latest is to buy ProShares UltraShort ETFs. These ETFs track twice the inverse of the daily performance of various indexes.
Shorting stocks or ETFs incur unlimited risk and dividend costs. Put options have time limits and premiums. The ProShort ETFs allow investors to take long positions without time limits. The ETFs hold positions in derivatives and benefit from a drop in the corresponding index price. ProShares offers a selection of 24 UltraShort ETFs that can make significant returns if their index drops. But buyer beware: If the index rises, then the UltraShorts will drop twice as much.
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.