Options on FAZ or Direxion ETFs

Discussion in 'Options' started by fisho, Jun 18, 2009.

  1. fisho


    Did anybody traded options on FAZ or similar ETFs ?
    Is there any skew or special pricing to be aware of ?
  2. has anyone worked a hedge between FAZ and FAS? I notice there is quite a bit of volume.

  3. fisho


    You have to rebalance everyday or every fixed deviation.
    Some people try to short both to profit from the time decay...
    I don't like so much such a strategy.
  4. what about doing a radio write or back ratio to go long both at the same time. If there is a major move in the overall market we'll see one of them rocket to the moon. What do you guys think?
  5. Insanity.

    Buying these 3x funds for more than a day trade makes the probability of losing money extremely good.

    Forget these stupid, irresponsible triples, and doubles.

    Trade the singles and use any strategy you want. Owning trips is for the ignorant. Even the people who put out these monsters tell investors that these are strictly for one (possibly 2-) day holds.

  6. fisho


    yeah RedEyeFly I was thinking about smtgh like that ... a backspread ...
    but I don't know what a radio write is...
    I wonder if you can treat it like a normal option because the underlying exhibit a peculiar behaviour.
  7. It's that particular behavior I'm interested in. Now the options above the money are very very cheap as far as my perspective of the banks goes.
    There are somethings which could be better understood before we go any farther with this. 1) what underlying actually makes up these ETFs (I hear a major portion of the direction is on account of JPM) 2) are the options standard american, I'm assuming they are. 3) was the price spike in FAZ after it just starting trading on account of the market or the demand for this type of vehicle.

    I understand what you are saying mark. I would not income trade these vehicles, but spec them out perhaps. I'm basically expecting at least one additional leg down on the banking industry, which if the historical prices of march can lead us to consider a move in the FAZ to 35-45, I think a gamma positive play may be worth looking at.
    There are many reasons why this type of move may never happen - particularly government actions and this quantitate easing garbage. Yet if the option market will sell you a play with 100:1 P/L ratio in case the house of cards falls down, it would seem more effective than owning gold, and a nice hedge against just about anything else i'm holding with a more neutral perspective.

  8. Lol, Radio write... yeah I've never heard of that one either! Darn auto spell check - ratio write my friends, ratio write.
  9. fisho


    LOL not bad the radio write !! I thought I know all the option positions but there is always smtgh new.
  10. I'm just suggesting that BUYING the doubles and triples puts you behind the eight-ball to start.

    These are not NORMAL ETFs. They tend to decrease in value over time.

    You can do whatever you want to do using the 'singles' or regular ETFs. That's all I was trying to say.

    #10     Jun 20, 2009