David Penn for Trading Markets explains that one of the biggest benefits of a leveraged ETF is that traders do not have to use a margin and still get a 2-for-1 bang for their buck.
Another benefit of a leveraged ETF is that traders can bet against a market without having to sell stocks or ETFs short. Inverse ETF trading is much more simple than taking a bearish position on a sector.
ProShares and Rydex are the primary providers of an extensive line of short and leveraged ETFs.
Take a look at these long/short ETFs that are appearing on investors’ radar:
- ProShares UltraShort S&P 500 Fund (SDS)
- ProShares UltraShort QQQ Fund (QID)
- ProShares UltraCap Mid-Cap 400 Fund (MZZ)
- Rydex Inverse 2x S&P 500 (RSW)
- ProShares Ultra S&P (SSO)
- Rydex Inverse 2x Russell 2000 (RRZ)
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.