Proshares Ultra Inverse ETFs

The double inverse shares are now trading (albeit barely).

UltraShort QQQ QID NASDAQ-100
SDS S&P 500
UltraShort Dow30 DXD DJIA
MZZ S&P MidCap 400


To reiterate my views on the single inverse shares (which also apply here):

• They trade intra-day; you are not limited to end of day pricing; This makes them superior to the Rydex Ursa mutual funds;

•  They are are rather illiquid; even less liquid than the plain inverse funds; (this may change over time);

• They are allowed in retirement/tax
deferred accounts; Not only can you now short in these accounts, you can now do so with leverage; (This could be a major negative for overly aggressive or undisciplined investors);

• They are inferior to the Qs, Diamonds or
Spyders. With the uptick rule exmption for ETFs, I am hard pressed to
see why you would want to use these outside of the tax deferred accounts;

• They trade with an even fatter 7 to 15 cent spread. As noted before, the Qs are liquid
as all hell;

• Again, there’s that odd pricing delay. As I type this, with the Nasdaq down 20 and the Qs off by 35 cents, the PSQs (Inverse Qs) are down more than QIDs (Ultra short).
Hopefully, that weirdness won’t persist as they begin to trade more.

The Bottom line remains:
These are good product for hedging in accounts that either cannot short or use
options; And while they are also superior to mutual funds, they remain are inferior to
traditional ETFs. Hopefully, as they become more popular and liquid, these pricing / spread / delay issues will work themselves out.

I consider these a work in progress…

Category: Investing, Trading

Zidane vs Chirac

Category: Economy

The Long Tail

Category: Data Analysis, Film, Markets, Media, Television, Weblogs

Typepad Outage All Day!

Category: Weblogs

Top Industries: Revenue Gains

Category: Data Analysis, Earnings, Economy, Technical Analysis

Making Insider Trading Legal

Category: Corporate Management, Politics

Jobs Report Redux

Category: Data Analysis, Economy, Employment

Chart of the Week: Leading Indicators Point To Employment Slowdown

Category: Data Analysis, Employment, Technical Analysis

Fortunate Son

Category: Music

Closed the Proshares Trade

Category: Trading