More investors are taking advantage of volatility and wide market oscillations with leveraged and inverse exchange traded funds to quickly capitalize on quick turns.
ETF investors bet big on triple-leveraged products Tuesday, anticipating a robust rebound after the back-to-back sell off, reports Michael P Regan for Bloomberg.
For instance, the ProShares UltraPro QQQ (NasdaqGM: TQQQ), which takes the 3x or 300% daily performance of the Nasdaq-100 Index, saw $155.2 million in net inflows Tuesday, or about 12% of the fund’s total market cap.
Additionally, the ProShares UltraPro S&P500 (NYSEArca: UPRO), which tracks the 3x or 300% performance of the S&P 500, experienced $83.1 million in inflows, or about 12% of its total market cap.
The slightly more conservative trader funneled $150.7 million into the the ProShares Ultra S&P 500 ETF (NYSEArca: SSO), which reflects the 2x or 200% daily performance of the S&P 500, or about 10% of the fund’s total market cap.
Regan also pointed out that there is a chance that some traders may have been throwing money into these leveraged ETFs to short the securities. However, short interest remains muted – for example, bets against TQQQ were at 0.9% of shares outstanding but way below the two-year high of 2.6% last month. Short interest on other leveraged stock ETFs also paint a similar picture.