A few thoughts on these: Is it getting too easy to short with leverage? This will ding Rydex’ business somewhat; How might this affect the indicators people have developed using Rydex funds?  (i.e, The Rydex Nova/Ursa Ratio)  

The 2 to 1 leveraged ETFs come out at the end of the month (~June 29th)

Click a fund name to view detailed information on the ProShares.

Closing Price Information as of
6/21/06
ProShares Listing
Fund Ticker NAV Change Price Change Benchmark
Short QQQ PSQ $68.62 $0.00 Nasdaq-100
Short Dow30 DOG $68.96 -$0.01 DJIA
Short S&P500 SH $69.19 -$0.88 S&P 500
Short MidCap400 MYY $68.73 $0.00 S&P MidCap 400
Ultra QQQ QLD $72.25 -$0.72 Nasdaq-100
Ultra S&P500 SSO $71.50 $0.62 S&P 500
Ultra MidCap400 MVV $72.35 $2.55 S&P MidCap 400
Ultra Dow30 DDM $71.76 $0.93 DJIA

 


Category: Psychology, Trading

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18 Responses to “Proshares Inverse ETFs”

  1. John says:

    I have been waiting for these for a long time. I hate only being able to get in and out of the Rydex and Profunds inverse funds on an end of day basis.
    The real key is not that it is getting easy to short with leverage, but that it is getting easier to short in retirement plans.

  2. John says:

    I think Rydex will be quick to join the mix. This has been a needed adjunct to ETFs for a long time. I know I plan to use them after they “burn in” a bit.

  3. erik says:

    wonder why hank took the job?

    absolutely genius. get’s to sell EVERYTHING on top with no strings attached, no stigmas, no questions. even his wife can unload on top. he’s just doing his civic duty. if this doesn’t signal the impending market rapture…

    i’m sure it’s just coincidence, but funny how the slide continued the day he took the job..

    http://quote.bloomberg.com/apps/news?pid=10000006&sid=aaiaVdTGKd8g&refer=home

  4. Myke says:

    This is a great new product line. I just sold my Profund USPIX. Now I can put a stop loss on my bear investments.

  5. B says:

    So, if I margin my account, I can get 4x the leverage. Nice…..so, futures are becoming less interesting to me unless I’m highly confident of the market’s direction.

    I’ll place my bets on 7 black please.

  6. ticker_tape_watcher says:

    Hi Barry,

    I’d be interested in hearing your opinion on the unwinding of the yen carry trade. I’ve read articles where some believe the market will crash when hedge funds start unwinding their positions while others say the yen carry trade isn’t large enough to cause a crash. What’s your take on all this?

  7. oxbird says:

    I have used the Rydex and Profunds inverse products from time to time. One of my concerns about them, however, is the derivatives, swap and/or counterparty risk that they may be affected by.

    I do not fully understand how these risks are addressed by these funds and I do not find any satisfactory (detailed) discussion of how these funds meet their investment objectives in the prospectus documents published by both Rydex and by Profunds. The prospectus information is very vague and there is really nothing else that I can find that gives me any specific information.

    Does anyone here actually understand these offerings enough to address the subject of the safety of the investment strategies that are employed in their management by Rydex and Profunds?

  8. m3 says:

    genius. absolutely genius.

    being able to go short, and only having to pay .95% in costs? am i reading this right? there’s got to be a catch somewhere…

  9. Brian says:

    oxbird, I was thinking the same thing

  10. Short and Leveraged ETFs

    For those that dont want to open up a margin account to go short the market, heres your ticket. Now you can go long an ETF to go short an index.
    New ETFs launching at the AMEX by ProShares will offer both short and leveraged index exposu…

  11. mkgref says:

    m3 -

    It seemed to me from reading through the prospectus that at any time within 5 years of a date they can require payment for “fees waived” as long as the resulting payment would not make your effective fees higher than those in use at the time.

    In other words if they incur 6% of fees in year 1 but can only charge you 0.95%, then in year 5 if they ratched fees up to 10%, they would be able to demand payment of that entire other 4.05%. Don’t know if that 4.05% would be subject to growing but, as this is a business venture, I would assume that is the case.

    I realize the case would probably never get that extreme but there is that chance. You also have to think that if it does perform well for 3-4 years they’re going to keep raising that fee. because people will be attracted to the fund anyway.

    And in a downturn they might extract some of the “wavied” fees from you since you’re taking your money out ayway. Just some thoughts.

  12. Michael C. says:

    >>>So, if I margin my account, I can get 4x the leverage. Nice…..so, futures are becoming less interesting to me unless I’m highly confident of the market’s direction.<<<

    Futures still reign over these products. They are superior in tax costs, liquidity, spread, leverage, etc.

    What does market direction have to do with using futures vs these ETFs? Unless one has a fairly small account, I can achieve 4x leverage with both, but with futures have plenty of cash left over earning 5% interest.

    I guess I answered my own question that these ETFs are geared toward smaller retail clientele?

  13. jab says:

    I have been waiting for these too! Do not know why Barry has a thinks there is a problem with making it easy for the average investor to do this??? Maybe he is thinking fools will lose thier money quickly … but isn’t this always the case. For those of us that try to be aware of the risk these are great tools.

  14. toddZ says:

    pretty cool stuff…

    BTW — ticker_tape_watcher — the last sell-off was part of the Yen carry trade unwinding. The dollar fell 7.5% against the yen April 7th to May 10th.

  15. wcw says:

    Yeah, I don’t see these as worthwhile vehicles in a world with futures markets either. The only reason of which I can think to need them is if, like my pals who work for the big banks and wirehouses, you’re circumscribed by a draconian compliance regime. I was looking at a job the other week at a subsidiary of one of the big names, and the sub inherited all the trading restrictions of the parent: no options, no futures, no short sales, and all trading with the parent firm only (at — cough — employee discount rates).

    So, say that instead of being as underwhelmed by me as I was with them, these folks had started to throw money at me and I’d taken the job. In that odd little instance, these ETFs would have some utility.

    Otherwise, I’ll take derivatives, thanks.

  16. JDamon says:

    Can someone tell me what the “Yen Carry Trade” means?

    I also believe these short ETF’s are great. I am wondering if ETF’s will eventually put the Mutual Fund business OUT of business?

  17. aaronb says:

    Given the measly skim you’re getting from Amazon, you might want to move over to goodstorm (http://mecommerce.goodstorm.com/) at the end of the month.

  18. aaronb says:

    woops, commented in the wrong tab. ignore previous.