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ETFs to Watch in Second Half of Hurricane Season

This article was originally published on ETFTrends.com.

Hurricane Florence became the sixth named storm of the 2018 Atlantic hurricane season and the first major hurricane of the year as it reached Category 3 status with winds roaring past the 125 mph mark. It was mother nature's notification that hurricane season is in full swing and natural gas traders are keen to utilize the Direxion Daily Nat Gas Rltd Bull 3X ETF (GASL) and Direxion Daily Nat Gas Rltd Bear 3X ETF (GASX) .

Inclement weather that manifests itself in the form of hurricanes can disrupt natural gas supply, causing fluctuations in its price. Though the price of natural gas has experienced a steady decline in the past year, it appears to be on a slight uptick since the beginning of hurricane season on June 1, which could see more increases in the second half of storm season.


Source: tradingeconomics.com

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The U.S. Energy Information Administration highlights three major supply and demand factors that can influence the prices of natural gas.

Three major supply-side factors affect prices:

  1. Amount of natural gas production
  2. Level of natural gas in storage
  3. Volumes of natural gas imports and exports

Three major demand-side factors affect prices:

  1. Variations in winter and summer weather
  2. Level of economic growth
  3. Availability and prices of competing fuels

Either way, traders can play both sides with three times the leverage utilizing GASL or GASX. GASX seeks daily investment results of 300% of the daily performance of the ISE-Revere Natural Gas IndexTM, while GASX seeks daily investment resultsof 300% of the inverse of the daily performance of the ISE-Revere Natural Gas IndexTM.

GASX invests at least 80% of its net assets in securities that track the index and other financial instruments that provide daily leveraged exposure to the index itself, which takes advantage of both event-driven news and long-term trends in the natural gas industry. GASL invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse or short-leveraged exposure to the ISE-Revere Natural Gas IndexTM--also based on event-driven news and long-term trends.

Related: A Beginner’s Guide to the RSI Indicator

For more investment strategies, visit the Leveraged Inverse Channel.

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