I wouldn't go near XLF or C, we are going considerably lower.
I'd play SKF a bit more before XLF
I'd play SKF a bit more before XLF
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Holy Xlf Batman!!
- Thread starter huh
- Start date
Quote from Jahajee:
Looking at the chart -- did it go as low as 5.76 last month?
Will consider this.
It did and I wish I bought another thousand shares. Could have sold out last week up nearly 100%. This thing has really tumbled this year. It has its risks (also no options) but its decently diversified, they sell calls on their positions and buy index puts. I think its as good a place to be as any on the long side.
Also see IID; International Equity Dividend Fund. Paying similar yield but 200 int. positions vs. 65- 90 in IGD.
Quote from midniteeuropa:
I wouldn't go near XLF or C, we are going considerably lower.
I'd play SKF a bit more before XLF
But thats my point here. How far can it realistically fall from here? Even if XLF drops to $5 there's enough volatility to write call options against this ETF and recover your loss in 4 months or so and play with the houses money by holding the shares. I know it COULD go to 0 but XLF ain't lehman and I just don't think the gov't will allow so many financials to fail that XLF would fall to 0.
I dont' know I'm just baffled and surprised to see it this low, I can understand Citi being under 10....but a financial etf....don't get it. I'm buying!
XLF isn't the only low-priced "index ETF" - there are several now that will run into trouble with the low dollar value. Especially the 2x etc levered ones where the slippage is going to just get silly - there are some interesting "implications" to 2x funds selling for less than the index they're replicating.
When they set these things up, clearly no one anticipated this kind of simultaneous dump in the underlyings.
When they set these things up, clearly no one anticipated this kind of simultaneous dump in the underlyings.
Random - Would you mind expounding on what you call "implications" for the 2X long ETFs?
Do you mean that if the index drops 51% from where it was a year ago, that the 2X ETF would need to drop 102%, which is impossible, since it can't go negative?
Do you mean that if the index drops 51% from where it was a year ago, that the 2X ETF would need to drop 102%, which is impossible, since it can't go negative?
Quote from Random.Capital:
XLF isn't the only low-priced "index ETF" - there are several now that will run into trouble with the low dollar value. Especially the 2x etc levered ones where the slippage is going to just get silly - there are some interesting "implications" to 2x funds selling for less than the index they're replicating.
When they set these things up, clearly no one anticipated this kind of simultaneous dump in the underlyings.
Damn you're right on, I hadn't even thought about the 2x funds.....I wonder what would happen if XLF drops 50% :eek:
I'm going to do some searching to see if I can find some more cheap $10 index efts with options. Seems like a good risk/reward FINALLY!
Quote from huh:
I mostly trade the RUT and IWM but just noticed the XLF trading at $10.56!!! I've been bearish but I gotta say I think I'm getting bullish on XLF. I'm looking at selling the Dec 10/6 put spread. The collected premium is around $107 with a max loss of $293. More importantly seems like buying shares of XLF at $8.93 a share seems like a no-brainer here!
I don't have much experience with trading XLF so any input on this would be appreciated. Some pros and cons I see:
Cons: Well its a bunch of financials.
Pros:
- Seems cheap at $8.93 a share because downside is only $8.93 and long term upside should be at least to $15 - $20.
- Its an etf so if it goes to 0 then I've got much worse problems since most of the financial institutions won't exist.
- Government bailout because I dont' think the government will let the major financials fail so I don't think XLF is going to 0.
- Current dividend yield at 5.45%, but even assuming the dividend yield gets slashed to 1 or 2% still not bad.
- Plus another 50% drop will take the value to 5 bucks and you can still write calls for decent amount.
So I've been buying and selling puts like mad on RUT but XLF looks darn tempting here!!
I'll take the contrary side to this
1) first of all, you're 'number blind' in an etf, there's no such thing as an 'expensive' or 'cheap' number
2) this sector XLF just went through a bubble - no iffs ands or butts. an etf can do ANYTHING in and after a bubble - just look at any computer networking stock etfs in the 2000-2002 period
am i saying XLF cant go up from here?
no, i'm not
i'm just saying that you cant look at a number and say it's cheap
Quote from swtrader:
I'll take the contrary side to this
1) first of all, you're 'number blind' in an etf, there's no such thing as an 'expensive' or 'cheap' number
2) this sector XLF just went through a bubble - no iffs ands or butts. an etf can do ANYTHING in and after a bubble - just look at any computer networking stock etfs in the 2000-2002 period
am i saying XLF cant go up from here?
no, i'm not
i'm just saying that you cant look at a number and say it's cheap
100% agree