As the equities market swings, traders have incorporated leveraged and inverse exchange traded funds to jump on short-term opportunities and hedge around events, like the Brexit vote.
“If ever there was a market environment for uncertainty hedging, it is now,” Andy O’Rourke, Managing Director and Chief Marketing Officer at Direxion, told ETF Trends on a call. “Things can change quickly.”
For instance, O’Rourke pointed to heavy product interest for leveraged and inverse ETFs that track gold miners and junior gold miners.
In the wake of the Brexit referendum results that triggered a global risk-off event, gold along with the miners segment rallied, with the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and the Direxion Daily Junior Gold Miners Index Bull 3X Shares (NYSEArca: JNUG) both surging on the safe-haven play. Both leveraged-long gold miner ETFs are among the best performing funds of the year, with NUGT up 546.5% and JNUG up 817.1% year-to-date.
Additionally, ETF traders have also exhibited an equal interest in shorting gold miners through options like the Direxion Daily Gold Miners Bear 3X Shares (NYSEArca: DUST) and Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST).
O’Rourke also pointed to elevated activity in biotechnology leveraged/inverse ETFs, the Direxion Daily S&P Biotech Bull Shares (NYSEArca: LABU) and the Direxion Daily S&P Biotech Bear Shares (NYSEArca: LABD).