SDOW: Benefits And Risks Of The Leveraged Bear Dow Jones ETF

Fred PiardInvesting Group LeaderFollow5ShareSavePlay(13min)CommentsSummaryThe ProShares UltraPro Short Dow30 ETF offers -3X daily exposure to the Dow Jones Industrial Average, primarily serving short-term traders.SDOW’s structure relies on swaps and futures, with daily rebalancing introducing significant drift risk over time.SDOW is best suited for trading and may be used for hedging but exposes investors to path-dependent decay in volatile markets.Trading signals must be based on the underlying index, because the SDOW price is biased by drift.Quantitative Risk & Value members get exclusive access to our real-world portfolio. See all our investments here » John M Lund Photography Inc/DigitalVision via Getty Images Fast Facts The ProShares UltraPro Short Dow30 ETF (SDOW) is a leveraged bear ETF based on the Dow Jones Industrial AverageSM Index with a factor of -3. SDOW was launchedThis article was written byFred Piard16.3K FollowersFollowFred Piard, PhD. is a quantitative analyst and IT professional with over 30 years of experience working in technology. He is the author of three books and has been investing in data-driven systematic strategies since 2010. Fred runs the investing group Quantitative Risk & Value where he shares a portfolio invested in quality dividend stocks, and companies at the forefront of tech innovation. Fred also supplies market risk indicators, a real estate strategy, a bond strategy, and an income strategy in closed-end funds. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.