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Short FAS/FAZ at same time ?
- Thread starter jimshaw
- Start date
You might want to read the following thread
http://www.elitetrader.com/vb/showthread.php?s=&threadid=158529
and in particular page 2:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=158529&perpage=6&pagenumber=2
http://www.elitetrader.com/vb/showthread.php?s=&threadid=158529
and in particular page 2:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=158529&perpage=6&pagenumber=2
Couldn't you use options to hedge your exposure or would that make this strategy no longer work?
Quote from m22au:
When you say "use options", what do you mean exactly?
The thread link provided above talks about how there is a possibility that FAZ could increase in price exponentially and cause anyone carrying out this strategy to experience a margin call. Since options are available for FAZ and FAS, one could short both ETFs as the original poster suggested and buy calls for both to cap any downside risk.
To clarify, is your proposed strategy the following:
short FAS
short FAZ
long FAS calls
long FAZ calls
As you may be aware, this is the equivalent of the following
synthetic long FAS puts
synthetic long FAZ puts
The strategy will work, as long as your gain on the short positions are enough to pay for the premium paid on the calls.
short FAS
short FAZ
long FAS calls
long FAZ calls
As you may be aware, this is the equivalent of the following
synthetic long FAS puts
synthetic long FAZ puts
The strategy will work, as long as your gain on the short positions are enough to pay for the premium paid on the calls.
Quote from KrispyKreme50:
The thread link provided above talks about how there is a possibility that FAZ could increase in price exponentially and cause anyone carrying out this strategy to experience a margin call. Since options are available for FAZ and FAS, one could short both ETFs as the original poster suggested and buy calls for both to cap any downside risk.
Quote from m22au:
To clarify, is your proposed strategy the following:
short FAS
short FAZ
long FAS calls
long FAZ calls
As you may be aware, this is the equivalent of the following
synthetic long FAS puts
synthetic long FAZ puts
The strategy will work, as long as your gain on the short positions are enough to pay for the premium paid on the calls.
Yes that was the strategy I was referring to.