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Monetizing Market Downturns via Short ETPs

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

The 38th week of the year (ending 23rd of September) saw the S&P 500 retreating, with high-conviction stocks leading the rout.

As seen nearly every single week since the year began, tech stocks were at the forefront of market rally. The S&P 500 Top 25 stocks by momentum underperformed the S&P 500 index (-3.65% versus -2.93%). Early September’s big swing up has seen substantial deflation, despite at least one rally.

Since the 19th of September, the prices of high-conviction stocks such as Tesla, Amazon and Nvidia have fallen by nearly 7%, 6% and 4% respectively. For long-term investors invested in these kinds of stocks, this might be bad news for their portfolio. However, for the professional investor with the wherewithal to consider a disciplined trading strategy, buying the Short (or “Leveraged Inverse”) ETPs is an important means of protecting the bottom line. For instance, this article from nearly a year ago demonstrates how buying a 20% coverage in the Tesla 3X Short ETP (TS3S) essentially ends up preserving a substantial amount of the value accrued by the stock across 2021.

Buying a short ETP holds several advantages over a short position held in the equity itself. For one, there is no need to constantly maintain a margin. Furthermore, the leverage factor is constantly maintained, thereby requiring no special effort by the investor. Depending on jurisdiction, there could be advantages to holding an ETP instead of a short position. For instance, in the UK, a short ETP can be held in a tax-saving ISA account while a short position can’t be.

Over the course of the past week as well as this past Monday, short ETPs have been the best-performing instruments across the entire range of Leverage Shares’ products.

Moderna, in particular, has been the most rewarding “inverse” play so far. The 3X Moderna Short ETP has delivered almost 200% in returns in the year till date (YTD).

There are many choices for the professional investor interested in either a tactical play to monetize the “bear days” or in protection for their existing investments. Click here to peruse the full list of products that Leverage Shares has on offer.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

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Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

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Julian Manoilov

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Julian joined Leverage Shares in 2018 as part of the company’s primary expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

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Violeta Todorova

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