On the other hand, traders who believe that the equity market rally has gone on too long and is due for a pullback may turn to inverse ETF options to hedge against potential market risks.
For example, the ProShares Short QQQ ETF (NYSEArca: PSQ) takes the inverse or -100% daily performance of the Nasdaq-100 Index. For the more aggressive trader, the ProShares UltraShort QQQ ETF (NYSEArca: QID) tracks the double inverse or -200% performance of the Nasdaq-100, and the ProShares UltraPro Short QQQ ETF (NasdaqGM: SQQQ) reflects the triple inverse or -300% of the Nasdaq-100.
“Inverse NASDAQ ETFs are useful and efficient investing tools for helping investors to profit from declines or to limit loss,” according to ProShares. “Investors who believe the NASDAQ-100 is going to fall might invest in PSQ, QID or SQQQ to pursue returns from the decline or to help hedge existing investments.”
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