ProShares UltraPro Short QQQ

SQQQ

Market cap $2.23B

There's been a lot of upbeat change in the Nasdaq since the last time Kevin Davitt (@nasdaq) appeared on our network in March. He examines the index's outperformance over recent years and how it compares to historical trends.

After a long wait, tech stock investors have plenty to cheer about. It took a whopping 167 days, but the Nasdaq-100 index last week surpassed its previous closing high from back in October 2025 while also racking up its longest daily positive streak since 1992.

Current NDX forward valuations are near 10- and 30-year averages, removing the overvaluation thesis for aggressive short bets. Market behavior suggests geopolitical shocks are already partially priced in, reducing the likelihood of sudden, sustained NDX declines. Leveraged inverse ETFs like SQQQ remain tactical tools, but absent a clear negative catalyst, holding them now is not justified, in my opinion.

SQQQ exists to profit when the Nasdaq-100 falls. It's a 3x inverse leveraged ETF, meaning if the Nasdaq drops 1% in a day, ProShares UltraPro Short QQQ ( NASDAQ:SQQQ ) aims to rise roughly 3%.

ProShares UltraPro Short QQQ ETF is a 3x inverse-leveraged tool for amplifying Nasdaq-100 declines, not a long-term investment. SQQQ holds only cash and equivalents, relying entirely on swap agreements for leverage, with a 0.95% expense ratio and high risk of rapid losses. Effective SQQQ use demands precise technical timing—MACD on the NDX is recommended for entry and exit signals, not SQQQ itself.

ProShares UltraPro Short QQQ ETF offers -3x daily exposure to the Nasdaq 100, catering to short-term traders and tactical hedgers. SQQQ experiences path-dependent drift, with slightly positive monthly and yearly drifts in recent history, but is vulnerable to steep decay in volatile, non-trending markets. Technical analysis and trading signals should be based on the underlying index (or QQQ), not SQQQ, due to drift-induced price noise.

The S&P 500 is approaching previous highs, prompting caution due to historical tendencies for pullbacks at such levels. Sharp recent rallies and a low VIX suggest market complacency, increasing the risk of a short-term retreat before new highs are reached.

Acquired 213,447 shares, estimated at ~$3.25 million based on the quarterly average price as of Q3 2025 Transaction value represents 1.4% of 13F reportable assets under management Post-trade stake: 213,447 shares valued at $3.25 million The position accounts for 1.4% of fund AUM, placing it outside the fund's top five holdings

ProShares UltraPro Short QQQ ETF is an ultrashort ETF with inverse leverage (-3x) on the Nasdaq-100. It is not a hedge instrument: it is not suitable for passive inclusion in a portfolio due to the inverse leverage decay effect. However, it can be used as a trading tool, but even here, decay plays negatively, especially in contrarian strategies or after a Nasdaq-100 dump.

ProShares UltraPro Short QQQ ETF remains a preferred hedge for technology-heavy portfolios amid rising market concentration and volatility. I maintain a HOLD rating on SQQQ, continuing to use both shares and options for portfolio protection despite its short-term nature. SQQQ is particularly effective for hedging against high-yield option income ETFs like GPIQ, with inverse effects amplified during volatile periods.