Leveraged/Inverse ETFs to Managed Challenges in a Volatile Market
Given the heightened risks we have experienced this year, investors may consider leveraged and inverse exchange traded funds to manage the challenges presented by volatile markets.
On the upcoming webcast, Smarter Beta: Tricks of the Trade for Leveraged ETFs , Sylvia Jablonski, Managing Director and Head of Capital Markets & Institutional Strategy Team at Direxion, and Andrew McOrmond, Managing Director of ETF Trading Solutions at WallachBeth Capital, will look at hedging strategies that investors have implemented and better ways to utilize leveraged and inverse ETFs in the markets ahead.
For instance, gold and gold miners have been a hot asset this year as investors bet on the Federal Reserve maintaining a low rate environment. Traders have also utilized leveraged and inverse gold miner ETFs to play the market swings, including the Direxion Daily Gold Miners Index Bull 3X Shares (NUGT) , Direxion Daily Junior Gold Miners Index Bull 3X Shares (JNUG) , Direxion Daily Gold Miners Index Bear 3X Shares (DUST) and Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST) . The Direxion options take the 300% long and short exposure to large miners and junior miners, respectively.
On Wednesday, NUGT jumped 22.2% and JNUG surged 24.0% after the Federal Reserve Chairwoman Janet Yellen said the central bank will be standing pat on interest rates for now, citing progress in economic and labor market growth and an improved risk outlook but ultimately waiting on continued progress toward its objectives.
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Similarly, the Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (TMF) and Direxion Daily 20+ Year Treasury Bear 3x Shares ETF (TMV) , which tracks the 300% long and short daily performance of the NYSE 20 Year Plus Treasury Bond Index, respectively, have been popular ways to gain exposure to the turns in the Treasury market.
In response to Yellen’s statement Wednesday, yields on 30-year Treasury bonds dipped to 2.398% while TMF rose 2.3%.
Financial advisors who are interested in learning more about leveraged and inverse ETF strategies can register for the Thursday, September 22 webcast here.