Comments for Stocks And Options Guru

Comment on Stock Trading Strategy: The Bullish Percent Chart by Grace Rodriguez

Grace Rodriguez — Sun, 01 Aug 2010 18:40:36 +0000

it is good to invest in the stock market but you must be very careful and not speculate on rising stocks..’-

Comment on RIMM vs. AAPL; Another Economic Recovery Play by Growth Stocks| Top 5 Best Growth Stocks | Stocks And Options Guru

Growth Stocks| Top 5 Best Growth Stocks | Stocks And Options Guru — Thu, 11 Jun 2009 05:21:08 +0000

[...] talked about THIS one extensively in a prior article. Its up a couple percentage points since then, but hasn’t encountered any big movement [...]

Comment on Triple Leveraged Arbitrage by kenny yuman

kenny yuman — Sat, 06 Jun 2009 22:20:49 +0000

With IB, my short positions in ERY were bought in twice. I got a warning on potential buy-in on FAZ.
Worse, after noticing huge amount of interest charge, I found that I was charged at over 20% on short borrowing on FAS. I switched to UYG since. In general, Direxion bulls carry high rates.

Comment on Triple Leveraged Arbitrage by Monsoon

Monsoon — Sat, 06 Jun 2009 01:54:14 +0000

Update: there are a few pairs of double (not triple) gain ETFs that can be shorted. Their availability changes from day to day, so you just have to try your luck.

Comment on Triple Leveraged Arbitrage by Jordan

Jordan — Thu, 04 Jun 2009 05:18:08 +0000

Interesting, I wouldn’t of thought it would turn out that way. The thing with rebalancing is that the results will vary drastically depending on what criteria you use to rebalance.
In that respect, rebalancing the portfolio is *almost* like an exit strategy, in that it vastly changes the results. I posted a little update at the bottom of the article. While some brokers will allow you to short these things, their are risks in that the low broker inventory can lead to problems like exorbitant charges for these shorts, and the position being closed at inopportune times. What do you guys think of using puts?

Comment on Triple Leveraged Arbitrage by Monsoon

Monsoon — Thu, 04 Jun 2009 03:34:46 +0000

Actually, it looks like rebalancing is just what you DON’T want to do. I ran two simulations on FAS and FAZ over the past 7 months, one without rebalancing, one with rebalancing every day (assuming no commissions). After one year, with rebalancing, every dollar shorted would only be down to 69 cents (it gets even worse with trading costs of course.); without rebalancing, down to 13 cents. Of course, there is more fluctuation. That $1 went to $1.26 in the first 10 days, before nosediving. But if you have some elbow room, it seems that the right strategy is just short and hold. Now, all of this is very academic, if you can’t borrow shares. If anyone knows of a way to do it, please let me know!

Comment on Triple Leveraged Arbitrage by Kevin

Kevin — Tue, 02 Jun 2009 16:59:22 +0000

I posted the analysis on decay:

http://blog.quantumfading.com/2009/06/01/leveraged-decay/

Comment on Triple Leveraged Arbitrage by Monsoon

Monsoon — Sat, 30 May 2009 22:11:13 +0000

So far it seems that shorting these securities is highly restricted. The only pair I could find available (through Schwab) is TYD/TYO but the volume is so small and the bid-ask spread so large that it doesn’t seem such a good deal.

Comment on Triple Leveraged Arbitrage by Jordan

Jordan — Sat, 30 May 2009 18:38:50 +0000

Thongthew,
I agree that in a market that is strongly trending, this strategy is probably not optimal, but your not looking at the potential for pullbacks.

Lets say 5% up days for 5 days, then 2% down days for 3 days.
100*1.15*1.15*1.15*1.15*1.15*0.94*0.94*0.94 = 167
On the other side,
100*0.85*0.85*0.85*0.85*0.85*1.06*1.06*1.06 = 53

That’s a total loss of $20, or 10% of total capital, even though there was a strong trend in progress. I see this as closer to a worst case scenario.

If you think the market will trend strongly one way or the other, it isn’t an effective strategy. If you expect a lot of volatility, but not a strong, continuous trend in one direction, then this play can work.
as shown with the financial ETFs, both starting at 60, both being 10 and under.
as shown with the smallcap ETFs, both starting around 60, currently at 27 and 24.
as shown with the largecap ETFs, both starting around 60, both now down to 35ish
as shown with the energy ETFs, both starting around 60, now at 35 and 20.
Long term, it seems to be a profitable strategy. Unless we break into a raging bull market, it should work.

Comment on Triple Leveraged Arbitrage by Thongthew Wongsanguan

Thongthew Wongsanguan — Sat, 30 May 2009 13:53:12 +0000

would not work for a market with a clear trend.
assuming $100 trade and $100 stock price.
example: 10% up day for 3 days.
100 * 1.3 * 1.3 * 1.3 = $219 .. shorting nets .. -$119
the other side
100 *0.7 *0.7 * 0.7 = 34.3 for gain of $65.7
Net loss = - $53.3