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Two Aggressive Ways To Play This Weekend's French Election

May 5, 2017 11:41 am
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Barely more than two weeks after the first round of France's presidential election, the finale arrives Sunday with centrist candidate Emmanuel Macron squaring off against far right candidate Marie Le Pen.

It is clear financial markets prefer Macron and that bad news for Le Pen equals good news for French stocks. For example, press articles emerged this week that even Le Pen's party is starting to acknowledge she could lose on May 7th. Since the first election on April 23, the Cac 40 has surged over 7 percent to all-time highs.

Risk-tolerant traders have other, potentially more lucrative avenues for preparing for the French presidential election, including the Direxion Daily FTSE Europe Bull 3X Shares (NYSE:EURL). EURL attempts to deliver triple the daily returns of the FTSE Developed Europe All Cap Index, one of the most widely followed gauges of European equities. 

While the FTSE Developed Europe All Cap Index is a broad Europe index, it is worth noting that the benchmark allocates over 14 percent of its weight to French stocks. France, the Eurozone's second-largest economy behind Germany, is the fourth-largest country weight in the index EURL tracks.

Traders are picking up on EURL's vibes. For the five-day period ended May 3rd, EURL's volume was more than 29 percent above the trailing 20-day average, according to Direxion data

Over the past month, EURL has averaged daily inflows of almost $41,000, according to issuer data.

Another, more focused play on the French election is the Direxion Daily MSCI European Financials Bull 2X Shares (NYSE:EUFL), the only leveraged ETF trading in the U.S. that is dedicated to European banks.

EUFL seeks to deliver double the daily returns of the aforementioned MSCI Europe Financials Index. The index is a free float-adjusted, market capitalization-weighted index that represents large-cap and mid-cap in Europe's developed markets, according to Direxion, one of the largest issuers of inverse and leveraged ETFs. 

France is just 2.4 percent of EUFL's weight, but a Macron victory could allay concerns about more departures from the European Union, which could be seen as a positive for the region's rebounding banks.

Volume in EUFL for the five days ending May 3rd, was 30 percent above the trailing 20-day average, according to Direxion.

Image source: Wikimedia commons

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