Iran Drama Threw A Curveball At Traders Using These ETFs

(Benzinga) In trading, there are definitely times when it's better to be lucky than good. Then there are times when a trader is good, but unlucky.

Following news of the death of General Qassem Soleimani, a bloody despot Iranian military leader, it looks some traders using leveraged energy sector exchange traded funds toiled with some misfortune on Friday.

First, the good news: the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares GUSH 1.43% gained 4.73% on above average volume as oil prices spiked on news of Soleimani's death. GUSH attempts to deliver triple the daily returns of the S&P Oil & Gas Exploration & Production Select Industry Index.

Since no one has a crystal ball, it's fair to say traders holding GUSH into Friday were somewhat lucky and there's nothing wrong with that.

Why It's Important

The same can't be said of those holding the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares DRIP 1.27%. DRIP, which tries to deliver triple the daily returns of the aforementioned S&P Oil & Gas Exploration & Production Select Industry Index, lost almost 5% on above-average volume on Friday.

Here's where the unlucky part comes in: Energy stocks, including exploration and production fare, rallied in December, prompting some traders to take profits in GUSH.

However, data indicate some of the dollars that flowed out of GUSH matriculated into the bearish DRIP. For the 10 days ending Jan. 3, DRIP hauled in $19.73 million while GUSH experienced outflows of $16.04 million, according to Direxion data.

What's Next

During that 10-day period, just three of Direxion's leveraged ETFs saw larger inflows than DRIP while just seven saw bigger departures than GUSH.

As is always the case, the latest round of Middle East geopolitical tensions are fluid and could change on a dime, but if Iran quickly retaliates, traders will almost certainly they're involved with GUSH and not left holding the bag of DRIP.


More Articles