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Options on FAZ or Direxion ETFs
- Thread starter fisho
- Start date
Quote from RedEyeFly:
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?
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.
Mark
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.
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.
Quote from 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.
Lol, Radio write... yeah I've never heard of that one either! Darn auto spell check - ratio write my friends, ratio write.
Quote from RedEyeFly:
I would not income trade these vehicles, but spec them out perhaps.
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.
Mark