lamdar » BGZ http://lamdar.com - Stock Market Analysis Wed, 02 May 2012 07:03:33 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Hedging With Leverage http://lamdar.com/2008/11/19/hedging-with-leverage/ http://lamdar.com/2008/11/19/hedging-with-leverage/#comments Thu, 20 Nov 2008 06:25:52 +0000 lamdar http://lamdar.com/2008/11/19/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. 

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