Sam Collins

BGZ - Risky Hedge, Big Payoff

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Direxion Large Cap Bear 3x Shares (BGZ) -- This exchange-traded fund (ETF) seeks to replicate, net of expenses, 300% of the inverse (opposite) daily performance of the Russell 1000 Index. Therefore, it is considered a very speculative trading vehicle.

But for those who are either hedging a big-cap portfolio or trading against those stocks, this could provide the leverage needed to offset a sharp pullback in those stocks.

On Tuesday, BGZ closed above its 50-day moving average, which gives it a possible trading target of $42, and a longer-term target of about $75.

This speculative ETF should only be bought by those who can afford the risk of a very volatile stock. And remember to always use a stop-loss when buying stocks with a high-risk factor.

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Sam Collins is a registered, fee-based portfolio manager who may be contacted at samailc@cox.net. You can also check out an archive of some of his most recent market outlooks.