(posts, links and tweets)This is not an investment advice, I’m not good at that, but rather an invitation for discussion. The pullback is due. The daytraders who watch the tape all the day know what to do. But what we should do, ordinary investors who check the charts after work, when the market is closed?
The popular leveraged and triple-leveraged ETFs are quite risky for us because of the decay (both FAZ and FAS are down for the year). Even though I think FAZ may post a decent jump up from here I think catching the top will be impossible for us. Be late just by one day and it will drop 30%.
So this Friday I’ve made a following trade:
- Went long some FAZ
- Sold at money covered calls against it
- Purchased in-money puts on FAS, so I’m long and short the time value at the same time
So instead of betting on that FAZ will go sharply higher I’m betting that FAZ will drift a bit higher but FAS will drop quite more sharply. Selling covered calls allow me to not to worry about time decay.
I don’t know if that’s a good trade or not, tell me what you think.
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8 Comments
went long faz at 7.95 friday and sold today pre opening 8.84
went long faz at 7.95 friday and sold today pre opening 8.84
The S&P even failed to backtest the broken 2-4 line from the uptrend, fell short twice.
Very week. I won’t be surprised to see as low as 750.
Commercial paper tumbled again
The ground zero of swine flu:
http://shankystechblog.blogspot.com/2009/04/possible-short-play-on-swine-flu.html
H8 just released. The credit is down $78bln for the week. The April is shaping very bad.
Andy,
As always you give us interesting news and thoughts.
This rally can only be broken by some bad news or a bad event because any proffit taking will be bought in to. What are you thoughts about such news or event? Thanks!
Sweden, first of all I’m a bad person to predict the markets now. I have no clue what the market is doing.
Having said that of course I have a good understanding what the economy is doing, however I don’t see a more than 70% correlation between markets and economy.
The rally will be broken when players will run out of money. At least the Feds must slowdown the printing. I think they will when foreigners will slowdown buying treasuries.
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