How do inverse ETFs work?

[Joey_Fantana]

How to Short Stocks in a Trading 212 Invest Account

It’s a good question! Since a market maker HAS to make markets (they buy when someone wants to sell, and sell when someone wants to buy) - they will either end up with an inventory of ETF/ETPs or be short ETF/ETPs. Here’s the caveat - MMs don’t want risk. So when they are long or short any product, they have to hedge. In the case of typical index ETFs (like S&P 500 or Nasdaq-100 that trade in Europe), they’d most likely hedge with futures given they trade around the clock. In the case of these…