When considering high conviction, short-term trading opportunities, as a trader, it may be beneficial to look at asset classes with higher volatility, because alongside the increased risk, there is greater opportunity for returns. Leveraged ETFs enhance potential returns by using borrowing and derivatives to increase the exposure to the underlying target with risk limited to your investment.
Many investors look to equity markets for trading and short-term market dislocations. Did you know that natural gas and crude oil futures contracts have historically exhibited higher volatility than equity markets
Focusing on the short-term trading, over the last 90 days, as of February 24, 2025, both crude oil and natural gas have exhibited higher volatility than equities, with natural gas significantly higher due to lower prices, seasonality and cold weather.
While traders look for catalysts that may move markets and create volatility, including leveraged commodities in your toolkit expands the potential opportunity to capture short-term returns. Entry and exit points may be based on various trading strategies and both fundamental and technical trading indicators, however, quite clearly, higher volatility indicates the potential for future price movement.
If you hold leveraged and inverse ETFs for more than one day, your return could vary considerably from the ETF's daily target return. The negative effect of compounding on returns is more pronounced when combined with leverage and daily rebalancing in volatile markets.
Leveraged ETFs are a convenience tool for traders, providing a solution that doesn’t require direct margin from security holders. Trading on the exchange just like a stock means that traders have an easy-to-use solution.
At LongPoint, we saw the gap in the Canadian marketplace for competition in exposures with higher volatility than equity markets and launched the Savvy Geared ETFs that provide either two times long or two times inverse exposure to natural gas and crude oil futures.
Commissions, management fees, and expenses all may be associated with investment funds. Investment objectives, risks, fees, expenses, and other important information are contained in the prospectus; please read it before investing. Investment funds are not guaranteed, their values change frequently, and past performance may not be repeated. LongPoint funds are managed by LongPoint ETFs and are available across Canada through registered dealers.
This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial and/or tax advisor for financial and/or tax information applicable to their specific situation.