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How to Profit from Bullish and Bearish Markets with UBS’ Daily Leverage Certificates (DLCs)

How to Profit from Bullish and Bearish Markets with UBS’ Daily Leverage Certificates (DLCs)

This post was originally posted here. The writer, Jun Yuan Lim is a veteran community member and blogger on InvestingNote, with a username known as @ljunyuan and has close to 2000 followers.

I still remembered back when I started off trading in the stock markets in 2017, I only knew how to “long” the market – meaning buying stocks at a lower price, and then selling at a higher price, with profits being the difference between the buy and sell price.

However, if the markets trend lower, then I am unable to get into trade – even though I can “short sell” (meaning to sell the stock first, and then buy back at a lower price – provided if the share price trends lower), but the problem with doing so is that, if the share price do not go in the intended direction (i.e. lower) but instead gaps up suddenly, then I will risk suffering from huge losses (because I will have to buy back the shares at much higher prices.)

That was before daily leverage certificates (or DLCs for short) came along – today, retail traders can make use of it to go “long” as well as “short” – in fact, one of the best things I like about DLCs is that, I do not need to worry about suffering from massive losses if I want to “short” a particular counter, as losses are capped (where the maximum amount of money I will lose is the amount of money I put into buying the DLC.)

Speaking of DLCs, UBS, which is currently the #1 in warrants and CBBCs (Callable Bull Bear Contracts) issuer in Hong Kong, have a total of 74 DLCs on 29 Hong Kong counters and a US index (Nasdaq-100 index) for retail traders to trade in, and potentially generating profits in both bullish as well as bearish market conditions.

If you are new to DLCs, not to worry – in this post, you’ll learn about the basics you need to know about them, including more information on what these DLCs are, how to trade them, the 29 Hong Kong counters and 1 US counter you’re able to trade DLCs on, debunking on 2 of the most common misconceptions people have about trading DLCs, pros and cons about trading DLCs, and finally, what you can do if you want to get your feet wet in trading DLCs without using your own money.

Let’s begin:

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