Friday, September 19, 2008

New short selling rules: More attention to Short ETF.

SEC has applied new rules to short selling. Naked short selling has been stopped on Thursday. Now sellers have to borrow company shares before selling them on the market and later on buying them for lower price in order to close position.

This SEC prohibition could attract more attention to Short/Inverse Exchange Traded Funds. Funds provide possibility to profit from declining market even without borrowing of the shares and setting up margin accounts. Another advantage is that in case of short selling trader can lose unlimited amount without proper stop loss. Contrary with Short ETF your investment can go just to zero.

Two major issuers of such a funds are ProShares and Rydex Investments. Already now we can see higher volume than usual for Inverse ETFs. But this situation is mainly because of accelerating credit crunch. After volatility will go down a little bit we will see how much traded volume has been increased. See below available Short ETFs split into the groups.

ETF Name (Ticker)

Short QQQ (PSQ)
Short Dow 30 (DOG)
Short S&P 500 (SH)
Short MidCap400 (MYY)
Short SmallCap600 (SBB)
Short Russell2000 (RWM)
UltraShort QQQ (QID)
UltraShort Dow 30 (DXD)
UltraShort S&P 500 (SDS)
UltraShort MidCap400 (MZZ)
UltraShort SmallCap600 (SDD)
UltraShort Russell2000 (TWM)

Short international :

Short MSCI Emerging Markets (EUM)
UltraShort MSCI EAFE (EFU)
UltraShort MSCI Emerging Markets (EEV)
UltraShort MSCI Japan (EWV)
UltraShort FTSE/Xinhua China 25 (FXP)

UltraShort Style:

UltraShort Russell1000 Value (SJF)
UltraShort Russell1000 Growth (SFK)
UltraShort Russell MidCap Value (SJL)
UltraShort Russell MidCap Growth (SDK)
UltraShort Russell2000 Value (SJH)
UltraShort Russell2000 Growth (SKK)

UltraShort Sector:

UltraShort Basic Materials (SMN)
UltraShort Consumer Goods (SZK)
UltraShort Consumer Services (SCC)
UltraShort Financials (SKF)
UltraShort Health Care (RXD)
UltraShort Industrials (SIJ)
UltraShort Real Estate (SRS)
UltraShort Semiconductors (SSG)
UltraShort Oil & Gas (DUG)
UltraShort Technology (REW)
UltraShort Utilities (SDP)


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