Short ETFs Can Help If Handled With Care | Page 2 of 2 | ETF Trends

2) There is a strict limit on the gain any short can make. The value of the index should not go below zero.

UltraShorts can make a bad day in a particular sector – this morning’s financials, for example – a good one for investors who hold short funds, says Will Swarts for Smart Money. ProShares says their Ultra funds family isn’t targeted to the "mom and pop investors."

But for sophisticated investors, ProShares Chief Executive Michael Sapir says they can be a great way to capitalize.

Making sector calls can work, but just be sure you have your exit strategy in place before you get involved. We watch the 200-day moving average and put an 8% stop-loss on each ETF.