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Hedging Your Long Positions With These Inverse ETFs (FAZ, QID, SKF)

“Even well diversified long-only portfolios can take a beating in volatile markets, and a number of investors would be a lot richer now if they started adding some short exposure as the benchmarks soared to record highs prior to the recession. Shorting individual stocks can often be too risky for individual investors, but thanks to the proliferation of exchange-traded funds (ETFs), hedging long positions with bets against a benchmark is now easier than ever, and no margin account is required,” Indie Research Reports.

They go on to say, “On Friday the Dow is sold off by triple-digits, and even top performers Wal-Mart Stores (NYSE:WMT), The Travelers Companies (NYSE:TRV), and Verizon Communications (NYSE:VZ) were in negative territory in early trading. Investors familiar with components of the Leveraged ETFs Index know that there are a number of ways to profit from the losses of the Dow and other benchmarks without selling short. The UltraShort Dow30 ProShares (NYSE:DXD), UltraShort S&P500 ProShares (NYSE:SDS), and UltraShort QQQ ProShares (NYSE:QID) are designed to track double the inverse of the Dow 30, S&P 500, and Nasdaq 100 indices, and all three are ahead by more than 3% for the session.”

“Investors with heavy long exposure to a particular equity segment have leveraged ETF options to hedge against those bets as well. Rather than dumping multiple financial stocks, and racking up big commission expenses in times of short-term volatility, traders can add some exposure to the UltraShort Financials ProShares (NYSE:SKF) or Direxion Shares ETF Trust Financial Bear 3x (NYSE:FAZ), although the latter is a 3x ETF that is recommended for day trading purposes only. The same hedging strategy can be implemented for a number of other sectors as well,” Indie Research Reports.


We have put together some more details on the inverse ETFs below:

Visit Our Category For: Direxion Shares Daily Financial Bear 3x ETF (NYSE:FAZ)

The fund seeks daily investment results, before fees and expenses, of 300% of the inverse of price performance of the Russell 1000 Financial Services index. The fund normally creates short positions by investing at least 80% of net assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. It is nondiversified.

Chart forDirexion Daily Financial Bear 3X Shares (FAZ)

Visit Our Category For: UltraShort S&P500 ProShares (NYSE:SDS)

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 index. The fund invests in derivatives that advisors believes should have similar daily return characteristics as twice (200%) the inverse of the daily performance of the Index. It invests typically the rest of the assets in money market instruments. The fund is nondiversified.

Chart forProShares UltraShort S&P500 (SDS)

Visit Our Category For: UltraShort Financials ProShares (NYSE:SKF)

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Dow Jones U.S. Financials index. The fund invests in derivatives that advisors believes should have similar daily return characteristics as twice (200%) the inverse of the daily performance of the Index. It invests typically the rest of the assets in money market instruments. The fund is nondiversified.

Chart forProShares UltraShort Financials (SKF)

Visit Our Category For: UltraShort Dow30 ProShares (NYSE:DXD)

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Dow Jones U.S. Financials index. The fund invests in derivatives that advisors believes should have similar daily return characteristics as twice (200%) the inverse of the daily performance of the Index. It invests typically the rest of the assets in money market instruments. The fund is nondiversified.

Chart forProShares UltraShort Dow30 (DXD)

Visit Our Category For: UltraShort QQQ ProShares (NYSE:QID)

The fund seeks daily investment results, before fees and expenses, that correspond to two times (200%) the inverse of the daily performance of the NASDAQ-100 index. The fund invests in derivatives that advisors believe should have similar daily performance characteristics as the inverse of the daily return of the Index. It invests typically the rest of the assets in money market instruments. The fund is nondiversified.

Chart forProShares UltraShort QQQ (QID)


NYSE:DXD, NYSE:FAZ, NYSE:QID, NYSE:SDS, NYSE:SKF


 

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