Trade Log

I Shorted The Gold Miners Leveraged ETF Pair

1.002 GDX

I entered into a short position in both NUGT and DUST (the Direxion Daily Gold Miners Bull and Bear 3X ETFs) with notional value of $5,600 each. Of the leveraged ETF pairs that I considered, this pair is the most attractive. Cost to borrow is fairly low at 5% per year and historical 30-day volatility has been high at around 150%. Please reference my guide to shorting leveraged ETFs for more information.

This is how the underlying gold miners index has performed since January 2015. Predicting future volatility is difficult, but the historical volatility for gold miners is high, and this short position is a bet that volatility will remain elevated in the future.

1.002 GDX

And this is NUGT and DUST plotted since January 2015. A short position entered in January 2015 without re-balancing would have returned around 70%.

1.002 NUGT and DUST

0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *