Amazon, in large part, can thank much of its success to web services. Traders who want to literally leverage this strength can play the Direxion Daily Dow Jones Internet Bull 3X Shares (WEBL).
At about 9.5%, Amazon comprises WEBL’s top holdings, followed by Facebook and Paypal, respectively. Traders can make a play on Amazon’s strength, which it draws from its web services, particularly cloud computing.
“Every year since at least 2014, more than half of Amazon’s operating profit has come from the online retailer’s cloud division, Amazon Web Services, which provides online services and tools that software developers can stitch together to run websites and applications,” a CNBC report said.
“It’s an impressive business in absolute dollar terms, not just percentages: AWS ended 2020 with $13 billion in operating income, which helped Amazon report total net income of $21 billion for the year,” the report added further. “No wonder Amazon chose the head of AWS for 15 years, Andy Jassy, as its CEO when Jeff Bezos stepped down earlier this year.”
WEBL seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Dow Jones Internet Composite Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments that track the index and other financial instruments that provide daily leveraged exposure to the index or to ETFs that track the index.
WEBL is up 43% while Amazon’s stock is up 7% for the year. When you juxtapose both lines in the same chart, the movements of both seem similar.
Looking for a Broader Tech Play?
Traders looking for something more broad as opposed to a niche web play could use the Direxion Daily Technology Bull 3X ETF (TECL). Being bullish on technology didn’t hurt any TECL traders this year given that the fund is up 65%.
With its triple leverage like WEBL, TECL is certainly not for the weak of heart. The fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Technology Select Sector Index.
The fund, which is up over 100% within the past 12 months, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index includes domestic companies from the technology sector.
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