Hedging With Leverage
If SDS isn’t enough for you, there are actually triple short (and triple long) ETFs out there. I didn’t mention when they opened up at the beginning of the month, since I use options when I want that much movement, but someone asked about them so I figured I should comment. One way to use these things is to decrease your position size and put the rest of the money towards something safer.
For example, if I had $10k that I was putting into SH (1x short), I would instead put $5k into SDS (2x short) + $5k into a safe investment, or $3.3k into BGZ (3x short) + $6.7k into the safe investment. The numbers today show that the results of the ETF parts would have been SH +5.78% (+$578), SDS +11.22% (+$561), or BGZ +16.98% (+$565). Depending upon how lucrative the "safe" part is, it could be a good idea to have other investments while still hedging the same amount. Note, SH and SDS are S&P 500 ETFs while BGZ is a Russell 1000 ETF triple short, but this was just a general idea of how to split your money and why these aren’t just for the crazies.