Learn stock market trading with leveraged etf & inverse etfs

Leveraged ETF shares are quite popular vehicles used for online trading and investing. They were introduced by several providers. A lot of them are inverse ETFs making profit when a particular index drops.

So far so good. These leveraged shares offer opportunity for investors who do not want or who cannot go and sell shares short. It is also possible to use these inverse ETFs when shares you want to short are not available for shorting by your broker.

There are also exchange traded funds which are allowed to be leveraged on the long side of the trade. You can make 2 or 3times more run-up when the index is going up. But there is also risk there. More below.

I personally do not track these inverse etf shares too often. I monitor standard exchange traded funds and only when I spot some shorting opportunity I am looking what is better – to sell short normal etf or use leveraged etf.

List of popular Proshares leveraged etf

ProShares is a big issuer of leveraged exchange traded funds. Their list of long leveraged funds has 48 tickers available. I list here only some of them and I recommend going to their site to see all available ETF tickers.

3x Leveraged shares

UDOWUltra Dow303x Dow Jones Industrial Index
UMDDUltra Midcap4003x MidCap index
TQQQUltra Nasdaq1003x Nasdaq 100 index
URTYUltra Rusell 20003x Rusell index
UPROUltra S&P5003x S&P500 index

Leveraged Inverse ETFs – 3x

SDOWUltra Short Dow303x Dow Jones Industrial Index
SMDDUltra Short Midcap4003x MidCap index
SQQQUltra Short Nasdaq1003x Nasdaq 100 index
SRTYUltra ShortRusell 20003x Rusell index
SPXUUltra Short S&P5003x S&P500 index
leveraged inverse etf SQQQ

leveraged inverse etf SQQQ

Some Leveraged Long Proshares

DDMUltra Dow302x Dow Jones Industrial
MVVUltra Midcap4002x MidCap index
QLDUltra Nasdaq1002x Nasdaq 100
UWMUltra Rusell 20002x Rusell index
SSOUltra S&P5002x S&P500
 leveraged etf SSO

leveraged etf SSO

Major Leveraged Inverse ETFs by Proshares

DXDUltra Short Dow302x Dow Jones Industrial
MZZUltra Short Midcap4002x MidCap index
QIDUltra Short Nasdaq1002x Nasdaq 100
TWMUltra ShortRusell 20002x Rusell index
SDSUltra Short S&P5002x S&P500


You can find a complete list of these leveraged long and inverse ETF on the ProShares ETF website.

Where is risk in leveraged etf and inverse etf shares

The risk associated with these leveraged exchange traded funds is in two major issues.

First is that these leveraged exchange traded funds use derivatives like options, futures and swaps – where time value also plays an important role. Time value decrease ovet time so it puts some costs to these funds.

Second issue is based on the mathematic model on which such leveraged ETF is constructed. As the market is moving not only in one direction but typically up and down over the time, mathematic rules dictate that these exchange traded funds are not able to track market indexes one to one and are often laggards.

So the major implication for using such leveraged exchange traded funds is that they are better for intraday trading or short-time hedging than for long-term holding. If you plan to short the market index or specific sector or commodity for a longer period of time, do it by shorting of standard long ETFs instead of leveraged inverse etf.

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