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ProShares UltraPro Short QQQ ETF: More Frequent 10% Yield Opportunities

Published Sun, 04 Oct 2020 21:08:13 -0400 on Seeking Alpha

Seeking AlphaETF AnalysisProShares UltraPro Short QQQ ETF: More Frequent 10% Yield OpportunitiesOct. 4, 2020 9:08 PM ET|| About: ProShares UltraPro Short QQQ ETF (SQQQ), Includes: PSQ, QQQ, SPXSby: Chetan WoodunChetan Woodun Medium-term horizon, ValueSummaryThe SQQQ ETF provides 3 times inverse exposure to the Nasdaq-100 index.
Intra-day volatility indicates that there are significant opportunities for making daily gains of 10% and above.
However, it is important to consider the risks.
Market conditions are currently uncertain with COVID lurking in the White House but expect more of a correction, not a sell-off.
SQQQ is appropriate both for trading and as part of a hedging strategy.
Only three weeks back, nothing seemed to be able to stop the surge of technological names on the stock market with the Nasdaq composite index setting a new all-time high.
That was on September 2 and on that very date the tech index was at a yearly high of 35%, a performance well above that of other stock market indices.
The next day changed all that with the Invesco QQQ ETF (QQQ) down by 5%. On the other hand, the ProShares UltraPro Short QQQ ETF (SQQQ), which follows the opposite path to QQQ but three times more aggressively, gained 15%.
Figure 1: Share price evolution of QQQ and SQQQ during the last 3 months.
Data by YCharts
Now, a 15% gain on $10,000 during a single day represents a win of $1,500 (excluding fees) over the market but there are compounding risks trading the SQQQ.
Still, its average daily volume traded exceeds even the popular QQQ despite carrying a higher expense ratio of 0.95% and this indicates that there must be advantages despite the risks.
For that matter QQQ carries an expense ratio of only 0.20%.
Therefore, identifying the opportunities either for trading to make some quick bucks or as part of a hedging strategy makes sense.
The opportunities
SQQQ is also one of the most actively traded ETFs in the world providing... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
POWERSHARES QQQ TRUST SERIES 1 193.23   0.0 0.00 1.49 0.78


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