Another Leveraged Bank ETF With Upcoming Earnings Opportunities

Second-quarter earnings from the financial services sector started flowing in last week, but that was just the start of the sector's earnings avalanche.

Several of the largest U.S. money center banks and asset managers as well as a slew of their smaller counterparts deliver earnings reports this week. Traders looking for more focused plays on the financial services sector can consider regional bank stocks and exchange traded funds (ETFs).

What Happened

The S&P Regional Banks Select Industry Index, one of the most widely followed gauges of regional bank stocks, is up 3.40 percent year-to-date. That equal-weight index sees a slew of its components deliver quarterly results this week.

Aggressive traders looking for upside with rate-sensitive regional banks may want to give a nod to the The Direxion Daily Regional Banks Bull 3X Shares DPST, which looks to deliver triple the daily returns of the S&P Regional Banks Select Industry Index.

DPST has a bearish cousin, the Direxion Daily Regional Banks Bear 3X Shares WDRW, which aims to deliver triple the daily inverse returns of the S&P Regional Banks Select Industry Index.

Why It's Important

DPST and WDRW could see increased, event-driven activity this week as five of the top 10 components in the S&P Regional Banks Select Industry Index report earnings. The earnings-related fun does not stop there for DPST and WDRW. Next week, three more of the top 10 members of the S&P Regional Banks Select Industry Index deliver earnings updates.

Ahead of this weeks bundle of regional bank earnings reports, there has been some increased activity in the bullish DPST. For the 30-day period ended July 12^th, DPST averaged daily inflows of almost $154,000. Over the same period, WDRW saw no inflows, potentially indicating traders are leaning bullish regarding regional bank earnings.

What's Next

Regulatory tailwinds could also provide a lift to regional bank stocks. Federal regulators are considering a plan to ease regulations on some of the smaller, more financially sturdy regionals.

“The initial plan, outlined in a statement by regulators on Friday, addresses how they would provide relief to banks with $100 billion in assets or less after Congress passed a law in May that raised the threshold for systemically important banks,” according to American Banker.

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