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13 Ways to Play the Market’s Next Big Move with Leveraged ETFs

Exchange-traded funds, or ETFs, have become wildly popular on Wall Street, largely because they offer easy diversification at cheap prices to reduce your risk.

But one very aggressive and potentially expensive corner of the market includes leveraged ETFs. These funds perform double or triple the underlying indices they are tied to — which means much bigger gains if you’re right, and much bigger losses if you’re wrong.

If you have the stomach for the risk of leveraged ETFs, there’s a lot of money to be made — particularly if you feel that the market is at an inflection point. So if you have a strong feeling about the state of the markets this summer, here are a few places to look if you want to spice up your portfolio with some leveraged ETFs:

Direxion Leveraged ETFs

Direxion offers a number of leveraged ETFs that provide triple the returns of underlying instruments, with names that tell you exactly what the fund is banking on. The Direxion Financial Bear 3X ETF (FAZ), for instance, is making a triple-leveraged bet that financials will flop and you’ll profit from a bearish strategy on the sector.

The Direxion website also has an easy screening tool to limit your searches to 3X bull or 3X bear funds. Its family of leveraged ETFs allows you to play wide swaths of the market, such as small-cap or large-cap stocks, or individual sectors such as financials. Here are some of the more popular Direxion ETFs:

  • Direxion Daily S&P 500 Bull 3X ETF (SPXL)
  • Direxion Daily S&P 500 Bear 3X ETF (SPXS)
  • Direxion Mid Cap Bull 3X ETF (MIDU)
  • Direxion Mid Cap Bear 3X ETF (MIDZ)
  • Direxion Small Cap Bear 3X ETF (TZA)
  • Direxion Small Cap Bull 3X ETF (TNA)
  • Direxion Financial Bear 3X ETF (FAZ)
  • Direxion Financial Bull 3X ETF (FAS)

Proshares Leveraged ETFs

ProShares also offers a number of leveraged ETFs. When shopping in this family, you just have to remember that anything that’s “Ultra” is a 2x leveraged ETF, and anything that’s “UltraPro” is leveraged three times.

For instance, the ProShares Short Dow 30 (DOG) is simply short the Dow (-100% correlation) while the Ultra ProShares UltraShort Dow 30 (DXD) is 2x leveraged to short the Dow (-200% returns) and the Proshares UltraPro Short Dow30 (SDOW), is leveraged 3x to the short side (-300% returns).

Like Direxion, however, there is a helpful screening tool here that allows you to specify whether you want to browse 2x funds or -3x funds … or whatever you choose.

Just make sure you pay attention to this distinction in name and strategy before buying into a ProShares ETF and double-check your tickers before any purchase. Some of the more popular varieties of these ProShares leveraged ETFs include:

  • ProShares UltraShort Oil & Gas (DUG)
  • ProShares UltraPro Dow30 (UDOW)
  • ProShares Ultra Financials (UYG)
  • ProShares Ultra Technology (ROM)
  • ProShares Ultra Health Care (RXL)

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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