Opinion-Questions on strategies

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Opinion-Questions on strategies

Post  AlpooplA on Thu Apr 23, 2009 1:40 pm

1) Leveraged funds hemorrhage money/lose value, if you hold on to them too long, and so do options. Does that make it a dumb idea to buy call options in leveraged funds?

2) I thought about buying leap put options in both FAS and FAZ on the premise that eventually these funds will decompose. Any opinions?

2) I've lost money on FAZ and SRS this year, due to bad timing, and realizing that the market is very irrational, so I'm looking at different strategies that could cover me some. I bought some FAZ shares and some June FAZ put options and am wondering if that is decent strategy.


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Re: Opinion-Questions on strategies

Post  Finance Fanatic on Thu Apr 23, 2009 3:22 pm

I believe the put strategy is a great one, and in fact I have found much success in doing it. However, now the problem we are facing is that many of the etfs are trading at such low levels that the strike price gaps are getting huge. However, whenever I can, I buy a put on the opposite fund I want to go long on, that way I have decay working on my side.

Indeed the market has been irrational and, unfortunately, I don't see a lot of sunny days ahead.
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