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Traders Winning Big With Reverse ETFs (EDZ, DPK, TYP, DXD, SDS, QID, FXP, EEV, DTO)

by Jason Smith | June 29th  |  Filed in: ETF News

Global economic worries and a decline in consumer confidence weighed heavily on the equity markets on Tuesday, and exposure to reverse ETFs paid off. Investors who track the Leveraged ETFs Index are familiar with a number of 1x, 2x, and 3x leveraged reverse ETFs that profit as respective sectors or benchmarks pull back. Today, select funds are ahead by as much as 10% as the Dow tumbles by more than -200 points.

The day’s top performers include the Emerging Markets Bear 3X Shares (EDZ), Developed Markets Bear 3X Shares (DPK), and Technology Bear 3X Shares (TYP), all of which are soaring by over 9% for the session. Investors should note that while highly leveraged bets pay off big when accurate, they fall just as fast in the event of a rebound, so 3x ETFs are recommended for experienced day-traders only.

Just last week we noted the UltraShort Dow30 ProShares (DXD), UltraShort S&P500 ProShares (SDS), and UltraShort QQQ ProShares (QID) as exchange-traded options for long-only investors to protect positions without the need for a margin account. Each is designed to track twice the inverse of its underlying benchmark, which can be a great way to isolate individual stock picks, or protect against losses without racking up multiple trade commissions. All three are ahead by more than 4%.

The UltraShort FTSE Xinhua China 25 ProShares (FXP) and UltraShort MSCI Emerging Mrakets ProShares (EEV) are also among the day’s top performers as Chinese growth worries weigh on the emerging markets, and oil bears are gaining more than 6% on the PowerShares DB Crude Oil Double Short (DTO).

Investors can track the Leveraged ETFs Index for performance trends and a suite of other metrics at tickerspy.com.

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