UWM $19.97 - Russell 2000 Proshares Ultra ETF
I sent an email out on Thursday suggesting we go long call options on this ETF.
The equity markets appear to be headed for a retest of the recent lows and I believe this will result in an eventual rebound. When the rebound comes even if it is still weeks away I think it could be strong given how severely we are oversold.
I think now would be a good time to try some bottom fishing on a market index. The one I am using is the Russell 2000. I am going to recommend the ProShares Ultra ETF, Ticker UWM. This is the double performance ETF that will respond with twice the speed of the underlying index.
This ETF does not have LEAPS so I am going to recommend the April $25 Call option symbol ULX-DY currently $4.00. The UWM was at $25 at Wednesday's open and collapsed to $20 with today's market drop. If the Russell returns to the 700 level by April and that is where it was just four weeks ago, then the UWM would climb to $50 and the option be worth $25. I think the risk/reward ratio of trying to pick a bottom here justifies the trade.