Single-stock focused ETF launches in the U.S.

Yahoo Finance's Jared Blikre breaks down the emergence of ETFs tied to single stocks, opting to go long or try and short companies like Tesla, Nike, Nvidia, and Pfizer.

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SEANA SMITH: All right, well, a new type of ETF hitting Wall Street focused on a single stock. And one of the first is a bearish bet on Tesla. Jared Blikre is here with a closer look at that. And Jared, we were just talking about Elon Musk. We didn't even mention or didn't talk a lot about Tesla, I should say, in that last segment with Andy. But what can you tell us about this ETF? Because I think a lot of people who've hated on Tesla have been waiting for a chance to get this opportunity.

- Thank you.

JARED BLIKRE: Yeah. And to be sure, to be clear, investors can already short Tesla if they have a margin account. But this just makes it easier. All you have to do is click and buy this one ETF. You can short Tesla.

Is it a good idea? I don't know. The timing might be bad. But I do have a chart prepared on the YFi Interactive. And we can see there are eight new tickers here. Here's TSLQ, interesting ticker. If you're a fan of Twitter, you probably know what that means. But you'll notice here, Tesla is short one times leverage, no leverage to the downside. But Nvidia short 1.25 times leverage. Then PayPal, that goes up to 1.5 in both long and short. And then finally, Nike and Pfizer both have two times leverage leveraged ETFs.

Now, the approval process was interesting. Eric Valciunas, who's head of ETFs over at Bloomberg, he noticed that all of these came to market when they were filed with the SEC, that they actually had 2 times leverage. So somewhere in the process, the SEC said we've got to tamp that down.

But I have another chart here. And we're going to do some math. I'm writing about this. So you don't have to concentrate too hard. But I want to show the riskiness of some of these investments. If we take a hypothetical stock and it's three times leveraged ETF, and we just kind of chop around with some volatile action.

Let's say they both begin at $100. And then let's say we have a 20% up day followed by two 10% down days, a 20% up a negative 20%, a negative 10%, another 20%. At the end of the day, guess what, the stock is worth $100.78, basically flat. Guess what, the ETF lost 40% of its value.

So with that having been said, I just want to show what the new Tesla short TSLQ ETF has done in comparison to Tesla. And you can see it is perfectly the inverse image over these last two trading days, Seana.

SEANA SMITH: All right, interesting stuff there, Jared. It makes me a little bit nervous, to be honest, to invest in something like that. Jared Blikre, thanks so much.