On Monday my plan is also going to include: 1) Buy JUN 09 10 calls for FAZ 2) Buy JUN 09 9 calls for FAS ^ in equal dollar amounts (they are both trading @ same $ and relatively same delta) What I figure is, in the next month, it will either become obvious that this is a simple bear market rally, or that the good times are here to stay. No good news from cooked profits will be coming and the majority of the gov't plans for the banks will be unveiled. It will either be a summer of love, or we'll be heading deeper into recession. Either way I figure the only way I would lose indefinitely is if BOTH of these two vehicles remain stagnated in the next 60 days. My downside is simply the cost of one side (either faz or fas, depending on how it plays out), but what I'm looking to take advantage of is a large spike in either one of these things in the next 50 or so days, while taking on minimal risk. We'll see how it plays out.
Please just remember that FAS and FAZ were never meant to be held...So so many people have lost money waiting for these to recover. My cousin was lucky to get on board FAS when it was $4 and he sold it at close to $10 last week. Lucky him...but hedging by hold both sides is a loosing game they way their value continues to decay over the terms longer than a week or two. If one spikes dramatically, then great, lucky break, but tha'ts rare and they aren't spiking as dramtically as they did before march 6th.
No, I'm not "making" it anything. I'm "saying" that it's more random than you give credit, especially over the weekend. I'd agree with the last para. It's pretty much what I was saying before. But this is what I mean by the eod selloff may be all that you're gonna get. We see a big dump at the end - good for you- and then 2 minutes from the close and all through the aftermarket period, nothing but up. I just can't justify to myself that the aftermarket rally is short covering. Now, if there wasn't that eod selloff, and rather just kinda drifted around up there into the close, then I'd say everything you say has a very good chance of being right, and we'll open down. But with this, I would be unwilling to make a bet that I'd put money on. I guess you're just braver than I, LOL... Good luck with FAZ.
Scot: I'm well aware of the price decay. Believe me, after a run-up like we've had for the past 1.5 months, the longterm potential of these vehicles is no doubt pretty damaged. I doubt we will ever see those spikes of $100-$200 again, but, I have some conditions set up that if they are met, will trigger a call position for JUN09
An all time low in an ETF that you know decays in price over time means nothing. Some other instrument is needed to make an evaluation.
For a short term overnight hold at a daily low pretty much within reason guarantees a quick profit the next morning. I have been doing this nearly every day (when I was in cash), since I started trading FAS and FAZ, and I have made money each time. Maybe not a ton, but always left the position black. The fact that the market hit another nearly all time high (since the march 6th basement bounce), for the most part means you can count on a morning sell off. The price of FAZ might not close very high tomorrow, but it will spike in value with a likely gap up, then spasmadic increases for the first 15-30 minutes of the day. What it does from there I don't know nor pretend to be able to predict, I was holding FAZ when it was climbing up to 13 last week, but unfortunately I followed my "Safe" routine and dumped it early in the day and didn't get to ride it up to 13. Even if I held it all day cause of continual increasing value, chances are I would NOT have held it overnight again because that's the opposite of my routine...eg holding FAZ overnight when it's already high. So no matter what I wouldn't have seen $13, but I did get a small boost the morning before. Bottom line is, its a routine that so far works for me, and could work for others if they were careful and got in FAZ when its really low at the end of the day and got out early while FAZ opens high.
there is no such thing as a guarantee. If you had bought FAS at the close on Monday, which was it's day low, you would have taken a 15-20% heat at the open the very next day. if there was a guarantee profit, you would not be wasting your time here posting about it.
I said almost guaranteed. And I am talking about FAZ, not FAS. It works with FAZ. FAS I do differently. I just try to find the lowest price I can get and hold it until it goes up to the next peak price. And that's not guaranteed either obviously. Last week killed me. I am still in the black, but I lost all my previous profits last week. And why not share my good fortunes and ideas with FAZ and FAS? No one here even all of us combined has enough leverage to affect the prices to make a difference to me. It would take a HUGE sweep of the basis stocks in financial sector individual stocks to make a difference. And what's the chance my advice here is going to impact Warren Buffett's or other affluent investors' choices? Zero to none, so if a few of us can benefit from something that's working, what's the harm? Am I making gold from it? No, but I do get a few percent with each trade on this routine.
Yep, 9% actually...the trade took a few seconds to execute so I lost a little more than 1% bought at 8.01 and sold at 8.83 Now its time to see if FAS will be a good buy for the day, buying last week at this time is exactly what killed me. I bought at 8 and change and it dived to 6 and change, I was lucky it came back up within the week IMO. Strange week last week. Pattern was broken.