We note a surge in bearish options flows in internationally based exchange traded funds Monday amidst the broad based equities market decline, which presents an excellent opportunity to delve into a number of leveraged/inverse ETFs from Direxion in the international equity space.
Direxion Daily Emerging Markets Bear 3X (NYSEArca: EDZ) is calibrated to deliver 3 times the daily inverse returns of the MSCI Emerging Markets Index.
Direxion Daily China Bear 3X (NYSEArca: YANG) is tied to the BNY China Select ADR Index, also delivering 3 times the daily inverse returns of that index.
Direxion Daily India Bear 2X (NYSEArca: INDZ) gives the investor exposure to 2 times the daily inverse returns of the Indus India Index, which is made up of 50 listed Indian equities.
Direxion Daily Latin America Bear 3X (NYSEArca: LHB) is tied to the S&P Latin America 40 Index, again delivering 3 times the daily inverse returns.
Direxion Daily BRIC Bear 2X (NYSEArca: BRIS) tracks the BNY Mellon BRIC (Brazil, Russia, India, China) Select ADR Index on a 2 times leveraged daily inverse basis.
Finally, Direxion Daily Russia Bear 3X (NYSEArca: RUSS) tracks the DAXGlobal Russia Index on a 3 times leveraged daily inverse basis.
We expect all of these above products to gain traction in volatile equity markets such as these, especially as options flows have picked up on the bearish side of trading in related international products.
Whether using these leveraged/inverse ETFs as hedging tools or for straight bearish speculative purposes, it is important for portfolio managers to understand the positive and negative effects of daily leveraging in volatile markets, and understand where and when such products can be optimally used.
Direxion Daily China Bear 3X
Chart source: StockCharts.com.
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.