Video Course 4 - Leveraged ETF's - why these are such great tools to trade, but not to own and real world examples of buys and sells

Leveraged ETF's are supercharged stocks so while you can make a lot of money, the downside is that you can lose a lot of money. Here are some helpful tips and tricks in using these tools.

What I’ll cover

In this post it will focus on a couple of things:

1. Why do you want to own or even trade these tools? Aren’t these just for degenerates?

2. Where can you find a list of ones to trade?

3. Are they all the same? Should I avoid some of them and why?

4. How I trade/own them and factors I use to determine when to get in or out

Why Leveraged ETF’s?

I talk about the VIX a lot and volatility can offer some great short term opportunities in index stocks along with individual stocks - ESPECIALLY in leveraged ETF’s. It seems everyday there are new leveraged ETF’s being launched that track the hot stock (like PLTR 0.00%↑ ) , sector or instrument of the day. I laughed when on a recent episode of the podcast “The Compound” they were explaining YINN 0.00%↑ and YANG 0.00%↑ which are 3X leveraged China ETF’s. The guest stops the show and says “Wait - there are leveraged ETF’s for China now?” and Josh Brown responds “Damn right there are leveraged ETF’s against China.” It’s clear whenever someone who’s been in this business for more than 10-15 years hears about these tools, their heads explode! 🤯

So why should you trade them? Long story short - 💥TO MAKE MONEY💥! They can provide great returns. Plus they can provide you an easy way to make money when a stock or the market is going down. Plus sometimes these carry less cost than trading on margin (which is required to short stocks) so they are much more efficient in that sense.

For example, short selling, which involves borrowing shares from a broker to bet on a downward move, can carry fees of 3% or more on the amount borrowed. Using margin to buy stock can become similarly expensive and can result in margin calls should the position begin losing money.

Where to find a list of Leveraged ETF’s

If you’ve got a favorite stock, you can typically just use Google to find out if there’s a leveraged ETF for it. I also keep a list in Trendspider for people to scan on (I scan the list every morning and put it in the newsletter), but literally these things launch on a daily basis and right now there are hundreds - it’s impossible to keep up.

I set up a screener in Seeking Alpha for you to view them. You can find most of them here and further screen so this is a good place to start. You don’t need to be a premium member to use the screener, but you do need premium to see the ratings below.

Click the photo to be taken to the Screener

I also went to google and found a page that lists some more details in list order (which you can do in Seeking Alpha Premium). You’ll see there are literally HUNDREDS of these ETF’s out there so we’ll go over which ones I like and why below, but use this page as a resource.

I used Google but if you find other places that are this good, let me know. I like the tools to be able to rank these by TAM, YTD returns, Expenses, Technicals and such.

How do you know which ones are okay to trade or own?

There are a couple of warnings around which ones to trade that I will highlight below, but the ultimate guidance I will give you around short term trading with these is - price is the ONLY thing that matters. If you make money, you’ll make money, but remember there are a few things to consider when choosing which ones to trade: