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New 3X Leveraged ETFs Becoming More Popular
Posted On Sunday, November 30, 2008 at at 4:03 PM by Finance FanaticEarly in November, Direxion launched their new 3X leveraged ETF funds available to be traded on the NYSE. With the huge increase in popularity in the 2X Proshares funds that we discuss frequently on this site, it will most certainly be the same fate for these new 3X funds, even though volume still remains rather low. However, everyday they are trading more and more. These funds, played the right way, can bring significant gains especially as we grow closer to finding a bottom. So, I thought I would go through the different funds and let you know what is now available, for you risky traders.
FAS - Financials 3X Bull
FAZ - Financials 3X Bear
TNA - Small Cap 3X Bull
TZA - Small Cap 3X Bear
BGU - Large Cap 3X Bull
BGZ - Large Cap 3X Bear
ERX - Energy 3X Bull
ERY - Energy 3X Bear
As I have said before, in relation to these funds, I am still hesitant to trade them, because of their low volume. Also, they are on the riskier side that I am usually comfortable with. However, FAZ, being under $60, with the increase in volume of trading it has been receiving, is beginning to become more and more appealing to me. I am going to wait out this next week to see how we deal with GM, but this could be a pick up for me in the future.
Look for these ETFs to pick up in popularity as time goes on and our volatility continues to go up. The Proshares funds started out in a similar way, and have grown immensely in popularity in the recent months. So here they are. Watch and trade at with caution, for these funds can make or break you in one day. We should see some other 3X funds hit the market shortly as well. The expense ratios on these are anywhere from .94-1.02. This is comparable to Proshares, considering the increased 3X leverage. I hope everyone had a good holiday weekend and is ready for the new week. It should be an interesting one. We'll see everyone tomorrow. Happy Trading.
Just curious, how confident are you in financial short ETFs for the near-term (next couple months)? And why?
I was somewhat surprised by the Citi bailout coming when it did -- much earlier than I'd thought. My SKF suffered accordingly, and I've also had an eye on FAZ, which suffered even more, as one might expect.
To me, the Citi bailout sent a strong message for everyone to hear: the government will NOT let the remaining big financials fail. They will not allow another Lehman-scale collapse. If you're big, bad, and own lots of crappy loans, you will get bailed out if you need it. The gov't spending estimates are now in the $8 trillion range for this.
I think it's wrong and flies in the face of free market principles, but regardless of what I think, it looks like that's how it'll be.
What makes you think the financials won't at least hold steady for the foreseeable future?
Agreed D, but simply bailing these guys out aren't doing anything for the time being and the Govt will not be able to bail everyone out. It's only a matter of time until they let one go through.
I also believe there will be more consumer withdrawals in the near future. People are running out of cash, businesses too. Where are these banks going to get their lending funds? I still think there is plenty of trouble for banks ahead.
Isn't it too much leverage that got us where we are to begin with??
--snoopyjc
Ha Joe, yes, but in a different light. :)
Finance has the extra risk of govt interventions, and they are fairly beaten down already.
Why not stick to real estate? Housing prices have another 15% to fall, and no recovery is in sight. It's also too big to save.
These 3 times the index funds exchange treaded funds that is are bad news for investors. They are more like futures or options and should not even be allowed to be called exchange traded funds.
This message is brilliant.
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Thanks a lot for this important info! :)
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I usually hear about BGU.
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