The ProShares Ultra Bloomberg Natural Gas (NYSEARCA: BOIL) stock price has risen 20.2% in the past month amid rising demand for natural gas due to the ongoing summer season. The summer season usually sees a spike in natural gas demand as households look to cool homes and offices.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
Weather forecasters had predicted that this North American summer would be hotter than usual and be characterised by heat waves and forest fires. The predictions have been accurate as households deal with higher temperatures increasing the need for cooling solutions powered by electricity derived from natural gas.Â
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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
The ProShares Ultra Natural Gas ETF (BOIL) stock has risen, driven by the higher demand for natural gas, leading to higher prices. The BOIL stock is up 76.33% this year, indicating its long-term trend is bearish despite the recent rally.
The ETF targets to return daily results two times (2x) the performance of the underlying Bloomberg Natural Gas SubindexSM. As a leveraged ETF, the BOIL stock moves much further than the underlying natural gas subindex.
Like most leveraged ETFs, holding them for long periods is never a good idea, as they tend to erode shareholder value over time. For example, BOIL underwent a reverse stock split on June 23, 2023, to boost its share price, but its percentage returns remained unchanged.Â
The BOIL stock is still down over 75% for the year despite the reverse stock split. The ETF has fallen along with the decline in the underlying index, although at twice the rate given that it seeks t return twice (2x) the daily moves of the natural ga subindex.
Investors should understand the risk they take when they trade leveraged ETFs such as BOIL, which promise more significant returns than unleveraged ETFs. A rally higher in the natural gas prices could trigger more gains in the BOIL ETF, rewarding holders.
However, investors are typically advised to buy and hold leveraged ETFs for short periods to hedge against other positions in their investment portfolio.
*This is not investment advice.
Proshares Ultra Natural Gas (BOIL) stock price.
The Proshares Natural Gas (BOIL) stock price has risen 20.15% in a month amid rising demand for natural gas.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.