Pitfalls of Leveraged ETFs and How to Take Advantage of Them with Stock Options | PowerOptions Web Log
Brokers are placing limitations on leveraged ETFs (Exchange Traded Funds) sales and in some cases stopping them completely. The Financial Industry Regulatory Authority (FINRA) has also weighed in, reminding brokers this past June to use caution when selling leveraged ETFs. What is the big deal with leveraged ETFs and why are their defenders and critics alike so passionate? An exchange traded fund (ETF) is essentially a mutual fund that can be traded like a stock. An ETF represents a portfolio of stocks, often in a particular industry or mirroring a particular index, like the S&P 500. Unlike mutual funds, which are valued and traded once a day at the close of the trading day, ETFs are valued and traded throughout the day, just like a regular stock. They may even be sold short or bought on margin. So ETFs provide the diversity of a mutual fund without the sale restrictions...
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