Editor’s note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Traders Eye Travel and Vacation Stocks, As the World Starts to Open.
Flip flops, sunglasses and air conditioning have all been back in style as the summer has literally heated up across the United States with record temperatures set just weeks after the summer solstice. Last summer involved significant restrictions on travel and vacations due to COVID-19. The majority of companies in the travel and leisure industries suffered devastating setbacks as many would-be jetsetters and cruisers had to change plans and settle for a stay-cation.
Back in Business?
While the situation surrounding COVID is still extremely serious in many places around the globe, high vaccination and lower disease transmission rates in some countries have helped to contribute to a very different experience for many compared to last year.
Things are not necessarily back to “normal,” but stocks associated with travel and leisure have made back crucial ground since their precipitous lows about a year and a quarter ago. However, travel & leisure stocks still seem to have considerable room to continue their recovery and price growth compared to before COVID.
For those who are traveling, health and safety concerns may still exist, but with 2,147,090 people passing through the U.S. Transportation Security Administration’s checkpoints on July 1st — a cut above 2019’s number of 2,088,760 and just short of triple 2020’s count of 764,761 — things seem to be looking up.
A Trader’s Opportunity?
One option to gain from short-term bull moves in the travel and leisure sectors for the experienced trader could be Direxion’s Daily Travel & Vacation Bull 2X Shares ETF (NYSEARCA: OOTO). OOTO is a leveraged ETF that tracks the performance of the BlueStar® Travel and Vacation Index (BTOURNTR) by index company MV Index Solutions.
BTOURNTR is an “index providing exposure to global commercial airlines, hotels and resorts, report casinos, travel agencies and online travel booking sites, hotel REITs, cruise lines, theme parks and ski resorts.” Some of the index’s top holdings include Walt Disney Co (NYSE: DIS), Booking Holdings Inc (NASDAQ: BKNG), Delta Air Lines, Inc. (NYSE: DAL) and Carnival Corp (NYSE: CCL).
OOTO: Index Top Ten Holdings. As of 6/30/2021.
|Airbnb - Class A||4.17|
|Delta Air Lines||3.72|
|Las Vegas Sands||2.90|
Vacation Mode: On
While the weather scorches travelers in the northern hemisphere, traders may want to consider opportunities to participate in a warmed up travel sector as well, especially domestically. Additionally, as temperatures cool in the coming months, cold weather activities popular in the United States, like skiing and snowmobiling could see a significant upswing along with cruises and travel for an escape to warmer climates.
Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-301-9214 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
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Shares of the Direxion Shares are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.
Direxion Shares Risks – An investment in each Fund involves risk, including the possible loss of principal. The Fund is non diversified and include risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of t he Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Market Risk, Natural Disaster/Epidemic and Market Disruption Risk, Counterparty Risk, Rebalancing Risk, Intra Day Investment Risk, Daily Index Correlation/Tracking Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the Consumer Discretionary and Industrials Sectors and the Airline and Travel and Vacation Industries. The market prices of internet securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities as these securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Please see the summary and full prospectus for a more complete description of these and other risks of the Fund.
Distributor: Foreside Fund Services, LLC.