By Brad Zigler

‘Tis the season, as they say. Seasons, actually. Today winter starts (hard to believe all that snow came for an autumn storm, eh?). Friday, though, marked the start of another season—the post-crash period.

As the United States slowly digs itself out of the worst economic downturn since the Great Depression, big changes loom large on the horizon.

Earlier last week, my colleague Marc Lichtenfeld detailed the impact that a healthcare reform bill will have on the various industries and stocks within the healthcare and biotech sectors.

The panelists are three SA contributor portfolio managers who use ETFs in client portfolios and write actively on new developments in the field of exchange traded funds. Here are the panelists, their credentials and a preliminary writeup from each of them with their views on leveraged ETFs:

1) How, if at all, do you use leveraged ETFs in your own portfolios?

At the ETF Digest, we’ve recently launched an all leveraged ETF program for Dave’s Special Portfolio. In it we’ve broken down the current group to a dozen that are currently popular based on performance and liquidity. At the same time, we keep another two dozen or so in reserve to bring out as interest and liquidity build. Our approach is very short-term, with holding periods of a day or so if unsuccessful, to no more than two weeks if successful.

I have used ProShares Ultra Short S&P 500 (SDS) intermittently to hedge client portfolios. The weightings are always small -- initiating positions at 2-3% of the portfolio.

I prefer using funds covering broad indexes. The daily compounding of the sector products can be very difficult to anticipate and can be very ineffective for hedging purposes. Likewise with the 3X products. The variability along these lines with SDS is, to me, acceptable.

Oil and gas ETFs are continuing their ascent despite a supply glut. Investors looking to add a little “oomph” to rising prices or hedge falling ones may want to consider leveraged and inverse oil ETFs.

Global economies are recovering, however, not at the fast rate commodity markets are indicating. What gives? Oil has become the inverse proxy to the U.S. dollar: as the dollar weakens, the price of oil moves higher. With the burgeoning debt piling up in the United States, the dollar looks to be under pressure to move lower for the foreseeable future, explains Steven Halpern for Blogging Stocks.

The craze of exchange-traded funds (ETFs) which employ leverage (the use of borrowed capital to increase the potential return of an investment) has been on a tear over the past year.* It makes sense that speculative investors would toy around with such vehicles given the extreme market volatility we’ve been experiencing of late. Combine that with the high level of conviction certain day traders have about which direction the markets will move in and when, and you can fully appreciate why the trading volume on these ETFs is so high.

Leveraged ‘inverse’ ETFs are part of this craze as well, allowing investors to take bets against sectors of the market which they expect to decline. Just to be clear, these leveraged ETFs are designed principally for experienced investors who engage in market timing. They wouldn’t generally be suitable for an inexperienced investor or somebody who didn’t fully understand the characteristics, including the risks of the product. The financial advisor channel uses leveraged ETFs as well. In my practice their primary use is as a hedging tool to lock in gains or limit losses on certain positions at certain times. The function which they do not serve, and most advisors will agree on this, is as core portfolio holdings. More on that below:

Oversupply

Recent reductions in natural gas (NG) price may be related to continued strength in production capacity, specifically in unconventional shale gas fields. The Potential Gas Committee estimated U.S. reserves are 35% higher than just two years ago, thanks to new technology that has allowed producers to drill for gas in shale rock. The committee estimated the country's total natural gas resources at 2,074 trillion cubic feet, an increase of 542 trillion cubic from its last report.

In the first article of this three part series, I mentioned a bearish divergence forming within crude prices. The article depicted a chart displaying bearish divergence between crude prices, the MACD, and RSI.

Even with the bullish news of stockpiles decreasing, I believe that the price of crude is at a short-term maximum. Any further price increase above $75/BBL for this commodity could greatly affect any recovery out of the recession.

As oil sold off over 6% Tuesday, I was searching for some companies to buy on the dip. I decided to look at opening the position with the buy/write option strategy, as this would give me a return if oil rallies, as well as protect my position to the downside if oil continued to slide.

As recently stated on OptionMaestro.com, I believed oil would peak in early to mid July. However if we keep hearing of these "green shoots" and the stock market continues to rally, I believe oil could continue to rally as well, and as late as October in my opinion. I don't think $75 a barrel oil is out of the question, especially on the back of a weak dollar.

To refresh everyone, as of May 14^th this is what I had to say for prices through this time of year. Recall when reading my prior call that oil was trading just under $60 per barrel and was charging upward at a torrid pace. The run up at that time also had a gigantic tidal wave of bullish "green shoot" sentiment behind it. I said this:

As promised in my previous post, Why I Sell Put Options (Part I), in which I shared why I never set these types of orders and my reasoning, here is Part II. In this post I will show you the benefit of writing naked put options on 40 popular leveraged ETFs. To understand this post you'll need somewhat of a background in stock options. To learn more about options and, how options can help protect your portfolio, and allow you to speculate with less money up front click here.

If you're finding this post for the first time and don't know the benefits of selling put options compared to setting market and limit orders, you may find it valuable to read Part I. If you're following up Part I, you'll notice writing naked puts on these leveraged ETF's bring much greater premiums.

As posted on my blog July 11, 2009, after reading a lot of blog posts and comments, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out if there was any real decay behind the leveraged ETFs, both long and short. I wanted to revisit this issue of the double and triple leveraged ETFs, and why investors should stay away from them, and to clear up some confusion. With the popularity of ETFs came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.

First of all, these are extremely risky, and investors shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors!

With just 10 days left until the option expiration, I have crunched the numbers on some of the most popular leveraged ETFs and it looks as if they're getting some summer heat. I am the first to admit that I think these ETFs are only for traders (and are an investor's nightmare), but they are so volatile, and bring such great premiums, it is hard for a trader of options like me to resist. A very short hold of 10 days could yield you a nice return considering it is only for ten days (crunch the numbers on an annual basis).

I have developed several strategies with these leveraged ETFs which seem to return steady profits month after month, and I usually wait to implement them within the two week expiration period.

Question: I'm seeing at least two reports that said China consumption is up a second month, up much more than a year ago and at record levels. Platts recently reported that China consumed 33.23 million metric tons of oil in May, up 6% from a year earlier.

Leveraged ETFs have quickly become the hot-button issue in the ETF industry, dividing investors and observers into two distinct camps.

On the one side are sophisticated day traders who believe these funds, which use derivatives and other complex financial instruments to provide amplified daily returns on a target index, are the greatest thing since sliced bread.

It's Friday June 19, 2009 and it happens to be Quadruple Witching. I assume today will be very volatile and that volatility will explode in the final hour or so of trading. That said, I thought it would be interesting to lay out a few option buy/write ideas that- if they hold at or above current levels (in the money) - will yield at least 1% in one day.

I understand that 1% isn't that much compared to some stocks that spike 25% in one day, but if this strategy was used at every options expiration and the underlying stock closes above the indicated strike, the method would add some additional cash to your portfolio.

Question: What happened in the last month that prompted this increase in gas price -- and oil price for that matter?