“Two of the most popular exchange-traded funds present triple-threats in both opportunity and danger for investors wanting to play the financial sector. The Direxion Daily Financial Bull 3X Shares (NYSE:FAS) along with its sister bear fund (NYSE:FAZ) are respectively the fourth and sixth highest-volume ETFs of nearly 1,000 funds in the $900 billion industry, according to Morningstar. The result: investors can either win big—or lose big,” Jeff Cox Reports From CNBC.

“The problem with these products is they move very quickly. If people are not prepared for the type of risk that is involved, it can hurt them in a hurry,” says J.J. Kinahan, chief derivatives strategist at TD Ameritrade. “In theory they’re great products. But without education on how they work and how they move they can be difficult to trade.”

Cox goes on to report, “Because of the volatility in the funds and their potential extreme moves, the most effective way to use the (NYSE:FAS) and (NYSE:FAZ) funds is for short-term trading and not as long-term investments, market experts say. For instance, an investor may want to use the bear-fund (NYSE:FAZ) to hedge exposure to financials if there is bad news in the banking sector. Rather than having to sell the stock positions in banks and take the tax hit, the ETF can act as a quick guard against a downturn in the sector.”

“If you wanted to get aboard the train and the train has left the station, you can get in on a short-term basis before switching back to an unleveraged issue,” says David Fry, a trader and publisher of ETF Digest. “You can catch up, basically.” “This is kind of a holdover from the financial crisis going back into March of last year when financials just dominated the news,” Fry says. “Financials are back in the news again, and they’re going to remain there for a while.”

“So many traders and investors are using them, looking at their titles, and pretty much just judging a book by its cover,” says John Gabriel, ETF analyst at Morningstar. “It’s absolutely an issue of education and understanding of what you own and what you’re trading.”

“In fact, the leveraged ETFs have inspired so much caution that many portfolio managers are being locked out of them as big trading houses grow leery of intensified scrutiny from regulators over the issues. Another one of the concerns is that the leveraged ETFs sometimes don’t even track their actual benchmarks over time. Last Thursday’s market plunge, for instance, saw a rash of trader arbitraging, and a disproporationate amount of ETFs plunged compared to stocks during the Dow’s nearly 1,000-point drop between 2 and 3 pm,” Cox Reports.

“The problem with these doubles and triples is they don’t correlate with the underlying benchmark over any period of time,” says Kathy Boyle, president of Chapin Hill Advisors in New York. “They’re really meant to be trading vehicles. That’s very difficult for the average adviser—they’re not set up to be that way. Most clients don’t understand.”

See more to the CNBC story: HERE

We have put together some details on the Direxion Daily Financial Bear 3X ETF (NYSE:FAZ) and The Direxion Daily Financial Bull 3X ETF (NYSE:FAS) for you to take a look at below:

Direxion Daily Financial Bear 3X Shares (NYSE: FAZ)

The Financial Bear 3X Shares seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the price performance of the Russell 1000® Financial Services Index (“Financial Index”). There is no guarantee the fund will meet its stated investment objective. The Russell 1000® Financial Services Index is a capitalization-weighted index of companies that provide financial services. As of April 30, 2008, the Index had 227 components, derived from the Russell 1000 Index with an average market capitalization of over $11 billion dollars and a median market capitalization of $4.4 billion dollars. One cannot directly invest in an Index.

Index Sector Weightings

Data as of 12/31/2009 is subject to change at any time.

Direxion Daily Financial Bull 3X Shares (NYSE: FAS)

The Financial Bull 3X Shares seeks daily investment results, before fees and expenses, of 300% of the price performance of the Russell 1000® Financial Services Index (“Financial Index”). There is no guarantee the fund will meet its stated investment objective. The Russell 1000® Financial Services Index is a capitalization-weighted index of companies that provide financial services. As of April 30, 2008, the Index had 227 components, derived from the Russell 1000 Index with an average market capitalization of over $11 billion dollars and a median market capitalization of $4.4 billion dollars. One cannot directly invest in an Index.

Index Sector Weightings

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NYSE:FAS, NYSE:FAZ