KOLD 2x Short
ProShares UltraShort Bloomberg Natural Gas
Shorts: Natural Gas (UNG)
Expense Ratio
0.95%
Leverage
2x Inverse
Issuer
ProShares
Inception
Oct 2011
High Risk Leveraged Product
KOLD is a 2x leveraged inverse ETF designed for short-term trading only. Daily rebalancing causes significant decay over time. NOT suitable for buy-and-hold investors.
What KOLD Shorts
ProShares UltraShort Bloomberg Natural Gas (KOLD) seeks daily investment results that correspond to -2x the daily performance of the Bloomberg Natural Gas Subindex. This index reflects the returns of natural gas futures contracts traded on the NYMEX.
Natural gas is among the most volatile commodities traded, with prices driven by weather patterns, storage levels, production data, and LNG export demand. KOLD amplifies this volatility with 2x inverse leverage, making it one of the highest-risk commodity ETFs available. The fund is heavily influenced by the natural gas futures curve — persistent contango in nat gas futures has historically created significant roll yield drag for long positions, which can actually benefit KOLD holders over short periods.
Key Risks
- Extreme Volatility: Natural gas prices can swing 10-20% in a single week due to weather forecasts, storage reports, or supply disruptions. With 2x leverage, KOLD can experience massive daily moves.
- Compounding Risk: Daily reset causes severe performance divergence over multi-day periods. In the highly volatile nat gas market, this decay is especially pronounced.
- Weather-Driven Spikes: Unexpected cold snaps, hurricanes, or heat waves can cause sudden, violent natural gas price spikes that inflict outsized losses on KOLD.
- Futures Roll Costs: While contango can benefit KOLD (since the long side suffers roll losses), shifts to backwardation during supply crunches can reverse this dynamic.
- Expense Ratio (0.95%): Ongoing costs compound against holders, adding to the structural headwinds of leveraged inverse exposure.
Best Use Cases
- Post-Spike Mean Reversion: Experienced traders may use KOLD after sharp natural gas price spikes driven by short-term weather events, betting on a return to normal price levels.
- Seasonal Trading: Natural gas tends to rally heading into winter heating season. Traders may use KOLD to position for price declines during shoulder months (spring/fall) when demand is lower.
- Hedging Natural Gas Exposure: Energy companies or traders with long natural gas positions can use KOLD as a short-term hedge against price declines ahead of EIA storage reports or production data.