Friday, July 29, 2011

How I am playing this market.

How many times have you heard you need to hedge, hedge, hedge?

Here is how I am doing it:

I bought FXA as a play on Australian currency, interest rates, and as a roundabout way to play commodities.

PFF as a way to get broad exposure to preferred stocks, this will undoubtedly lose value in a down economy but its pays a monthly dividend so that will cushion the blow somewhat.

FAZ 3x levered financial short, be careful with this one as it suffers from major decay thanks to the leverage instruments that need to be rebalanced on a daily basis.

I’ve also stocked up on weekly options on FAZ, Call me crazy but I need even more leverage than this speed bullet provides so I going for out of the money calls and puts, any dramatic move in either direction and this Out of the money strangle can make some serious money.

TVIX is a levered ETF that tracks the VIX and it goes up in value as the VIX index does. I also have a strangle consisting of OTM options on the VIX.

TBT is a 2x inverse 20+ Year U.S. Treasury Bond ETF. Play it with a strangle.

P.S.

Anyone know of any leveraged ETF’s that provide weekly options aside from FAS, and FAZ?

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