How To Sell The SP500 Short In An IRA

We all know you can’t trade on margin in an IRA. Unfortunately that has curbed investors, and traders from shorting the market. So how do you hedge yourself, or trade the downside? With the introduction of the Proshares market style ETFs, the options are abundant. Not only can you use the investment instruments to short the SP500, or Nasdaq markets, you can take a position 2x short, or long certain indexes or sectors. I trade one of the frequently; QID.

SDS, the SP500 Ultrashort has grabbed my eyes here. A trading friend mentioned it to me today. One problem some of the ETFs have is a lack of liquidity. SDS trades with an average volume of 1.5 million shares. No reason you can’t buy decent size there.

SDS has a buy signal today. I’d like to see the ETF clear the 50dma (red line), before taking it though. With options expiring, it may be next week before a major move occurs.