On the other side of the trade, traders who utilized inverse ETFs to ride the bearish turn are trimming their bets. The ProShares UltraPro Short S&P 500 ETF (NYSEArca: SPXU), which also takes the inverse 3x or -300% daily performance of the S&P 500, saw 8% of its market cap flow out Tuesday.
Nevertheless, not all investors threw caution to the wind and tried to bet the farm on a rebound Wednesday. For instance, the ProShares Short S&P500 (NYSEArca: SH), which takes a simple inverse or -100% daily performance of the S&P 500 index, saw an additional $110.9 million in inflows Tuesday. The increased interest in SH suggests that some traders are still hedging against further pain in the equities market with short position. [Inverse Stock ETFs to Hedge Further Pain]
Potential investors should be aware that these types of leveraged investments come with significant risks. While the ETFs may juice returns, investors are also exposed to potentially increased losses.
For more information on leveraged funds, visit our leveraged ETFs category.
Max Chen contributed to this article.