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Bears Fawning For FANG With A Newly Upsized ETN

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Bears Fawning For FANG With A Newly Upsized ETN

With the Nasdaq Composite seemingly racing to record highs on an almost daily basis, the FANG quartet of Facebook (NASDAQ: FB), Amazon.com (NASDAQ: AMZN), Netflix (NASDAQ: NFLX) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has once again taken caught the attention of buyers. After a cooling-off period, for Netflix and Amazon specifically, the renewed love for FANG stocks created an interesting situation in the MicroSectors FANG+ Index 3X Leveraged ETN (NYSE: FNGD).

What To Know

Bank of Montreal, the issuing bank of REX Shares' MicroSectors exchange traded notes, recently commenced two $25 million “upsizings” – one last month and another last week – on FNGD, indicating trader interest in the leveraged inverse FANG product is robust.

When a firm "upsizes" its debt, it's a sign of increased demand. In the case of FNGD, a leveraged exchange traded note that attempts to deliver triple the daily inverse returns of the NYSE FANG + Index, Bank of Montreal increased the product's aggregate debt amount to $125 million. 

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Why It's Important

That index “includes 10 highly liquid stocks that represent industry leaders across today’s tech and internet/media companies. The index is equally weighted, providing a unique performance benchmark that offers investors a value‐driven approach to technology investing. Unlike market cap-weighted indices, which can be dominated by a few large stocks, an equal‐weighted index offers for a more diversified portfolio,” according to REX Shares.

Along with the FANG stocks, FNGD's index equally weights Apple Inc. (NASDAQ: AAPL), Alibaba (NYSE: BABA) and Tesla Inc (NASDAQ: TSLA), among others.

What's Next

If the FANG stocks and some of the other aforementioned names continue their torrid paces, FNGD traders may have no choice but to consider the ETN's bearish counterpart, the MicroSectors FANG+ ‐3X Leveraged Exchange Traded Note (NYSE: FNGD).

“Despite the recent tech‐led rally from names like Apple, Google, Alibaba and Tesla trading at or close to record highs, we continue to see significant increased demand for our short‐3x FANG ETN (FNGD); so much so, that our partners at BMO increased the number of notes outstanding,” said REX Shares President Scott Acheychek.

 

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