Top 3 Ways to Trade the Market Meltdown

Mar 15, 2023

Markets are a disaster.

Volatility is spiking. Fear is spreading. The major indices are crumbling.

Not only did we see bank failures earlier this week, but now we’re seeing issues at Credit Suisse after the Saudi National Bank said it would not increase its stake in the company.

Worse, according to CNN, “The bank’s shares were trading down nearly 22% in Zurich on Wednesday, and the cost of buying insurance against the risk of a Credit Suisse default hit a new record high, according to S&P Global Market Intelligence. The crash spilled over into other European banking shares, with French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank falling between 8% and 10%.”

Unfortunately, until the fear subsides, volatility – as dictated by the Volatility Index– will continue to spike. While you can always short stocks, or buy put options to benefit from falling securities, you can also use bearish ETFs, and even Volatility ETFs as protection.

In fact, some of the top volatility ETFs to consider include:

ProShares Ultra VIX Short-Term Futures ETF (UVXY)- The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. The UVXY ETF has an expense ratio of 1.38% at the moment.

ProShares VIX Short-Term Futures ETF (VIXY) — ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. The VIXY ETF has a current expense ratio of 0.87%.

Typically, all will track the movements of the Volatility Index.

Or, you can always use a bearish ETF, such as the ProShares Short S&P 500 ETF (SH). This ETF seeks daily investment results that correspond to the inverse (-1x) of the daily performance of the S&P 500. The SH ETF has an expense ratio of 0.89%.

These are just a few ways to trade further potential fear in the market. Stay tuned for more.

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