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business newsTriple ETFs, Triple Returns?
Newly available options offer large potential rewards - but commensurate risk.
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Toward the end of February, Direxion launched another triple ETF pair: MWJ, the mid-cap bull, and MWN, the mid-cap bear. In mid-April, Direxion added some triple ETF bonds to the mix as well, with a 30-Year US Treasury bull (TMF) and bear (TMV) pair, as well as a 10-Year US Treasury bull (TYD) and bear (TYO) pair.
For more details on the current Direxion triple ETF lineup, check out the graphic below, or visit the Direxion Shares ETF web site.
Click to enlarge
In addition to expanding the universe of available triple ETFs, Direxion has sought to correct tracking errors seen in these ETFs by adding “daily” to each ETF's name, in order to emphasize that these ETFs are rebalanced on a daily basis, and only attempt to match daily moves - not to track the target indices over an extended period of time.
Interestingly, anyone who visits the Direxion Shares homepage is met with the query: “Direxion Shares are not for everyone. Are they for you?” and a link that attempts to discourage what they describe as the "conservative" investor. One of the aspects of triple ETFs that has interesting strategic implications is the availability of options. As of this week, there are now options available on all of the Direxion triple ETFs, with the exception of the ones based on the EAFE index (DZK and DPK).
Needless to say, there are very few trading vehicles out there with the potential to move as rapidly as options on triple ETFs. But for experienced options traders, these options offer a great deal of potential reward - paired with commensurate risk, of course.
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