Benzinga | Aug 19, 2021 11:36AM EDT

Why The SQQQ ETF Will Take Off If The Market Goes Lower

Some analysts and investors believe the market will start to trend lower. They argue there are headwinds such as inflation. Some also suggest that considering the markets have moved higher, it is overdue for some profit-taking.

Fortunately for investors, there are ways to hedge portfolios against a downturn. There are even ways to profit. This can be done with inverse ETFs. These ETFs are structured to move in the opposite direction of the markets.

One of them is the ProShares UltraPro Short QQQ ETF (NASDAQ:SQQQ). This ETF uses leverage and is designed to move by a factor of three inversely to the NASDAQ 100 Index. For example, if the Index falls by 2%, SQQQ should rally by about 6%.