ProShares UltraShort Bloomberg Natural Gas (KOLD)
ARCA ARCA Primary Summary
KOLD Chart
The Case For Trading Natural Gas With The BOIL And KOLD ETFs
I rate ProShares Ultra Bloomberg Natural Gas ETF and its bearish counterpart KOLD a Buy as tactical trading tools amid heightened volatility. U.S. natural gas prices pivot around $3/MMBtu, with volatility driven by global LNG demand and geopolitical risks in Europe and the Middle East. BOIL and KOLD are suitable only for short-term risk positions due to leverage, time decay, and high management fees; strict risk management is essential.
KOLD: A Leveraged ETF Not For Investors
ProShares UltraShort Bloomberg Natural Gas ETF is designed to deliver twice the inverse daily performance of natural gas prices. KOLD's leveraged structure makes precise timing critical. Long-term returns for KOLD are typically negative.
From KOLD To BOIL: 2X Leveraged Momentum Plays On Natural Gas Futures
ProShares Ultra Bloomberg Natural Gas ETF and its inverse ProShares UltraShort Bloomberg Natural Gas ETF, better known respectively as BOIL and KOLD, offer 2x leveraged exposure to natural gas futures, suitable only for tactical, short-term trades. Both ETFs are designed for directional momentum plays, not buy-and-hold strategies, due to amplified decay during sideways and volatile markets. Recent natural gas price spikes, driven by a polar vortex and short covering, have made BOIL attractive for leveraged upside, but reversal risk is high.
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ProShares UltraShort Bloomberg Natural Gas Profile
| ARCA Exchange | US Country |
Overview
The fund focuses on achieving its investment objective by primarily investing in Natural Gas futures contracts. It adopts a strategic approach to navigate through various market conditions and aims to capitalize on the investment opportunities within the Natural Gas market. In scenarios where direct investment in futures contracts is not feasible or prudent due to market emergencies, disruptions, or extreme volatility, the fund demonstrates flexibility by considering alternative investment options such as swaps. This adaptive investment strategy is designed to maintain operational continuity and seek optimal investment outcomes, even in less than ideal market conditions.
Products and Services
- Natural Gas Futures Contracts
- Swaps (Conditional)
This product is at the core of the fund's investment strategy. Futures contracts are agreements to buy or sell a specific amount of natural gas at a predetermined price on a specific date in the future. By investing in these contracts, the fund seeks to profit from the fluctuation in natural gas prices. The fund's involvement in the futures market is a reflection of its focus on the energy sector, particularly natural gas, and its expertise in predicting and capitalizing on market trends.
In certain conditions, such as during a trading halt, flash crash, periods of volatility, or illiquidity in the futures market, the fund may opt to invest in swaps. Swaps are derivative contracts through which two parties exchange financial instruments. These can include various types of investments, but in the context of this fund, they primarily involve exchanging cash flows based on the underlying natural gas prices without requiring the physical exchange of assets. This strategy offers the fund flexibility and the ability to maintain exposure to natural gas prices, even when direct investment in futures is considered impractical or risky.
