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There’s A New Trading Tool That Allows Traders To Trade Cannabis With Leverage

U.S. traders looking to actively trade cannabis stocks have a new instrument to use in their trading toolkit.

REX Shares, a Connecticut-based provider of exchange-traded products, announced today the launch of the MicroSectors Cannabis 2x Leveraged ETN (MJO), the first U.S.-listed leveraged cannabis product.

“There is a void in the market for trading products around cannabis,” said Scott Acheychek, president of REX Shares. “I think most people, when they’re trading in the cannabis space, are just picking individual stocks. The thing that has been lacking is a leveraged ETP for this sector. We’re adding something to the marketplace that currently does not exist.”

The firm also launched theMicroSectors Cannabis Index ETN(MJJ), a non-leveraged alternative to MJO.

Both MJO and MJJ are exchange-traded notes, meaning they are debt securities traded throughout the day (not to be confused with their exchange-traded fund counterparts, which are investment funds that hold baskets of stocks). The ETNs are senior, unsecured debt obligations issued by the Bank of Montreal.

Though they’re different in how they are constructed, leveraged ETNs like MJO behave similarly in many respects to leveraged ETFs—both instruments seek to magnify the daily performance of the index they track. In the case of MJO, the stated goal is to return 200% of the daily performance of the Indxx MicroSectors™ North American Cannabis Index (MSMJ). MJJ, meanwhile, seeks to replicate the performance of the index without added leverage.

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