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VIDEOWays to Profit Off the Weakening Hurricane Earl
By
Roger Nachman Sep 03, 2010 1:00 pm
As Earl loses its force, picking up some shares of these two ETFs could help you strengthen your portfolio.
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Hurricane Earl has been weakening recently. What once was a Category 4 storm, on a scale of 1-5, has now downgraded to a Category 2 hurricane. Traders were expecting Earl to reach mammoth proportions and cause mass havoc, and a few industries started to get hammered, namely the insurance industry and airline stocks.
As Earl has weakened, so have these ideas. With every loss comes someone else's gains.
Here are a few ways to play the weakening of Hurricane Earl. Take a look at the SPDR KBW Insurance ETF (KIE) and Claymore/NYSE Arca Airline ETF (FAA).
The reason traders may want to take a look at KIE is pretty obvious. The insurance companies won't have to pay out nearly as much as everyone had been expecting in insurance claims. The storm is still expected to cause some damage to the East Coast, most notably in Massachusetts. Areas like Cape Cod and Nantucket will be hit hard, but not nearly as hard as expected.
You can find the list of the top-10 holdings in KIE here, but some of them are Aflac (AFL), Chubb (CB), and Hartford Financial (HIG).
Another way to profit off Earl's weakness is to look at Claymore/NYSE Arca Airline ETF (XFAAX).
Labor Day weekend is the last big weekend for vacationing and travel, and a weaker storm should generate more profits for the travel & leisure industry. A list of the top-10 holdings can be found here; they include Delta Air Lines (DAL), UAL Corp (UAUA) and US Airways (LCC).
There is always the chance that Earl could go back out to sea and regain strength, but instances like this are rare and meteorologists aren't expecting this to be the case here.
As Earl weakens, picking up some shares of these two ETFs could help your portfolio strengthen.
Below, find some more great ETF and market content from Benzinga:
Risk Management From Markets to Market-Amoebas, and Back to MMT
ETFs to Watch September 3, 2010
Afternoon Market Update
No positions in stocks mentioned.
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