+ 2.93
+ 0.87%
+ 3.04
+ 0.9%
+ 3.77
+ 0.91%
+ 0.28
+ 0.2%
+ 1.62
+ 0.97%

Ahead Of Helsinki Summit, Some Traders Bet On This Russia ETF

July 17, 2018 1:42 pm
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On Monday in Helsinki, President Trump met with Russian President Vladimir Putin, producing a firestorm of controversy and criticism in the traditional media as well as social media.

Eschewing politics to focus on investing, the S&P 500 closed modestly lower yesterday while the MVIS Russia Index (MVRSXTR) eked out a small gain.

What Happened

Data suggest that prior to the Trump/Putin meeting, some traders were giving leveraged Russia exchange traded funds (ETFs) renewed attention. When it comes to US-listed leveraged Russia ETFs, that conversation centers around the Direxion Daily Russia Bull 3X Shares (NYSE:RUSL) and the Direxion Daily Russia Bear 3X Shares (NYSE:RUSS).

RUSL aims to deliver triple the daily returns of the aforementioned MVIS Russia Index while the bearish RUSS looks to deliver triple the daily inverse returns of that index.

Why It's Important

Prior to the Helsinki summit, there was a noticeable increase in activity in the bearish RUSS. For the five-day period ended July 13, volume in RUSS was 73 percent above the trailing 20-day average, according to Direxion data. Only one Direxion leveraged ETF saw a larger spike in volume over that period.

On a more subdued basis, volume in the bullish RUSL over those five days was also above the trailing 20-day, notching a 24.33 percent increase.

Some of that increased activity in the leveraged Russia ETFs is attributable to the Helsinki summit while some traders may have been making indirect bets on oil prices. The Russian economy is famously oil-centric as the country is the largest producer outside the Organization of Petroleum Exporting Countries (OPEC), a fact reflected by the MVIS Russia Index's 42 percent weight to the energy sector.

What's Next

While these trends can change rapidly, in the month leading up to the Helsinki summit, traders favored the bearish RUSS, albeit modestly, over the bullish RUSL.

For the 30 days ended July 13, RUSS averaged over $15,600 in daily inflows, a modest sum to be sure, but still better than the outflows from RUSL.

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