Does anyone know how this works in the market? A coworker was talking about triple shorting the DOW or ETFs and I’ve never heard of such a thing and how it works.
Leveraging is where you borrow a bunch of money, maybe 2, 3, or 10x your current assets, and investing them all at once. Selling, then paying back what you owe, earning the interest on the leveraged amount rather than the current amount. Its just a form of superinvesting… its qualitatively the same as all other forms.
Well, he was talking about a ticket designated just for shorting the DOW. He mentioned something about the ability to short that ticker that shorts the DOW which is almost like holding a super long position on the DOW.
Way over my head then…
Probably talking about leveraged ETFs. Direxion Daily and Proshares have a ton of them for nearly everything imagineable. You can go long/short indexes, regions, sectors, bonds, etc. with 2x and 3x leverage. For example the ticker symbol ‘DXD’ would short the Dow-30 with 2:1 leverage so if the Dow declines by 1% in a day the fund’s share price should appreciate 2%. SDS shorts the S&P 500 with 2:1 leverage, etc. They are usually very accurate with regards to how much they go up and down but generally it is best to not use them over a very long period of time. Invest/trade wisely.
- Chris
Thank you sir!