The price of natural gas has been moving higher and if it continues to do so, the ProShares Ultra Bloomberg Natural Gas ETF (NYSE:BOIL) should follow along.
In addition to rallying gas prices, there’s another reason why the performance has been so strong. It uses leverage and is designed to move two times (2x) the amount that the price moves.
For example, if natural gas gains 2%, BIOL should gain about 4%. If gas is up 3%, BIOL should rise by about 6% and so on.
But investors need to exercise caution.
Leverage is a great way to increase profits, but it can also be a way to increase losses. If natural gas moves lower, BIOL should fall by about twice as much.
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