Tesla Inc. (NASDAQ:TSLA) experienced a pre-market stock decline on Friday and fell by almost 3%. The impact was visible on several inverse ETFs linked to Elon Musk's EV giant which experienced a similar roller coaster ride.
What Happened: According to Benzinga Pro, the Direxion Daily TSLA Bull 2X Shares (NASDAQ:TSLL) fell 2.93% in pre-market trading after a significant 43% rise the previous day, following Tesla's earnings announcement.
However, some ETF linked to Tesla gained momentum in Friday pre market. The Direxion Daily TSLA Bear 1X Shares (NASDAQ:TSLS) experienced a 21.88% drop on Thursday but managed a 1.10% rebound in pre-market trading on Friday.
Meanwhile, the Tradr 2X Short TSLA Daily ETF (NASDAQ:TSLQ), which had plummeted 43.93% post-earnings, saw a 3.40% increase in pre-market trading.
The T-Rex 2x Inverse Tesla Daily Target ETF (NASDAQ:TSLZ) also rose 3.12% in Friday's pre-market after a 43.94% decline on the previous day.
These inverse ETFs are designed to profit from a decline in the value of an underlying asset, in this case, Tesla's stock. They provide investors with a way to hedge against or speculate on stock price drops, offering a strategic tool in volatile markets.
Why It Matters: Leveraged and inverse exchange-traded funds (ETFs) are becoming popular among traders who seek short-term market opportunities. These financial instruments magnify daily market movements.
However, Direxion warns its investors to not track the ETFs beyond a single day time frame as it is riskier and should be tracked by active investors with knowledge about leverage risks.
As of June, there were over 234 leveraged and inverse ETFs available, reflecting their growing traction among traders.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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