Mess With the Leveraged Biotech Bull ETF and get the Horns

Mess With the Leveraged Biotech Bull ETF and get the Horns June 24, 2015, 16:00

In the 1985 classic “The Breakfast Club,” (sorry millennials, you simply are not cinematically savvy enough to remember such fare), Principal Richard Vernon reminds John Bender that messing with the bull leads one to getting the horns.

Messing with the biotech bull has horned some traders and investors as the newly minted Direxion Daily S&P Biotech Bull Shares (LABU) is proving to have particularly sharp horns. LABU is not yet a month old, but the first triple-leveraged bullish biotech ETF is already setting a torrid pace.

With Monday’s 8.6% gain, which was accrued on more than triple the ETF’s average daily turnover, LABU is up 33.7% since coming to market on May 28.

LABU attempts to deliver three times the daily returns of the S&P Biotechnology Select Industry Index. The S&P Biotechnology Select Industry Index is the underlying benchmark for the well-known SPDR S&P Biotech ETF (XBI) , the third-largest biotech ETF by assets. [More to Come for Biotech ETFs]

As of April 30, 2015, the Index was comprised of 98 stocks. The companies included in the

Index have a median market capitalization of $1.54 billion and are concentrated in the energy and biotechnology sectors as of April 30, 2015. Component securities have capitalizations ranging from $320.9 million to $149.0 billion as of April 30, 2015," according to Direxion.

To LABU’s credit, though this is not an endorsement of holding such an ETF over long time frames, the fund has delivered better than triple XBI’s gains since debuting. XBI is higher by 9.8% since LABU came to market.

With Monday’s pop, LABU is in the midst of a six-day winning streak. LABU now has 18 trading days under its belt and has finished higher on 12 of those days. Monday was the biggest volume day in the ETF by nearly 50% over the 324,500 shares that changes hands in the rookie fund on June 17. LABU was one of eight biotech ETFs that made new highs yesterday.

For those bold enough to bet on biotech retrenchment, LABU has a bearish cousin, the Direxion Daily S&P Biotech Bear Shares (LABD) .

Direxion Daily S&P Biotech Bull Shares

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