How To Play These ETFs For A Possible Downside In The Markets (VXX, TZA, TNA, SSO)

“We saw a very weak attempt at a fade this morning, although that actually looked more like profit-taking. I have my eye on a few things this morning, so let’s not waste time, as a second attempt is under way,” Timothy Collins Reports From The Street.

Collins goes on to say, “First, gold is holding its move, but watch closely here. A flat finish or slightly higher would be very bullish; however, a down day could form a bearish engulfing candle. I still am bullish on gold, but we will take protective measures should this develop today. We made an earlier move on Baidu (BIDU) today, taking some profits and protecting some shares, but now we’ve protected the remaining shares with more July 80 puts at $5.00. We now have a synthetic call, being long shares married to long puts. Our downside is limited, and fortunately locked into a profit, while our upside is unlimited. There is plenty of time until expiration, so we intend to work around these positions.” 

“I’ve received a few questions on how I would short if I thought there was downside coming. My answer is that it depends. It depends on how you feel the downside is coming. If I thought a big “whoosh” was coming, then I would be long the iPath S&P 500 VIX Short Term Futures (NYSE:VXX), something like the July 25 calls. If I felt it were a longer, steady downward move, so a trend, then I would be long the Direxion Daily Small Cap Bear 3x Shares (NYSE:TZA), preferably the July 6 calls. If I thought it would be a choppy downward move, then I would prefer puts on the ProShares Ultra S&P 500 Fund (NYSE:SSO) or the Direxion Daily Small Cap Bull 3x Shares (NYSE:TNA),” Collins Reports.

We have put together some more details on the ETFs mentioned. Feel free to visit our categories for each ETF for more insight as well.

iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) Visit Our VXX Category: HERE 

The investment seeks to replicate, net of expenses, the S&P 500 VIX Short-Term Futures Total Return Index. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500 index at various points along the volatility forward curve. The index futures roll continuously throughout each month from the first month VIX futures contract into the second month VIX futures contract.

Chart foriPath S&P 500 VIX Short-Term Futures ETN (VXX)

Direxion Daily Small Cap Bear 3x Shares (NYSE:TZA)  Visit Our TZA  Category: HERE

The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the Russell 2000 Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

Chart forDirexion Daily Small Cap Bear 3X Shares (TZA)

ProShares Ultra S&P 500 ETF (NYSE:SSO) Visit Our SSO Category: HERE

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

Chart forUltra S&P500 ProShares (SSO)

Direxion Daily Small Cap Bull 3X Shares (NYSE:TNA) Visit Our TNA Category: HERE

The investment seeks to replicate, net of expenses, 300% of the daily performance of the Russell 2000 Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

Chart forDirexion Daily Small Cap Bull 3X Shares (TNA)

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