Ultra Short ETFs Benefit From Volatile Market

In light of last week's market volatility, it is no wonder the ProShares Ultra Short ETFs were top performers. Ultra Short ETFs give double the opposite of the market return and are seen as "bearish" ETFs.

ProShares UltraShort Dow 30 (DXD) was up 3.5% over the last five days, while the Diamonds Trust (DIA) was down 1.7%. ProShares UltraShort S&P 500 (SDS) rose 3.7% over the last five days, and the SPDR (SPY) was down 1.8%. Similarly, ProShares UltraShort QQQ (QID) gained 2.3% and the PowerShares QQQ (QQQQ) dropped 1%. ProShares offers the Short and Ultra Short ETFs in other sectors and styles.

Although the market has been choppy lately and some may wonder if we are entering a bear market, it is important to keep in mind there have been up days and down days. So if you are thinking of using one of these "bearish" ETFs, keep in mind those days when the market does rise, the losses on one of these "bearish" ETFs would be magnified. As with any investment you want to add to your portfolio, it is important to know what you are buying and create an exit strategy, so you can get out of a position before you ride it down.

DXD, DIA, SDS, SPY, QID, QQQQ 1-yr chart:

Comments

[Lisa]

This article doesn't appear to include any information of any value, unless I missed something.

2007 Jun 25 12:21 PM

[Ruben Giro]

agree

2007 Jun 25 09:15 PM

[swellman]

That was funny.

2007 Jun 27 12:58 PM

[cma]

Are there any ultra-long bond ETFs?|

2009 Oct 11 02:00 PM