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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: lisalisalisa who wrote (166991)	11/25/2008 12:16:10 AM
From: James Hutton	Read Replies (2) \| Respond to of 306849

I think I posted this a while back: i.e., getting the benefit of both time and slippage through options on 2x inverse ETFs. I haven't tried or tested it. But the problem, with something like SRS is the volatility is so great that it can overcome the slippage. E.g, if you had november 150 puts on SRS (or god forbid sold naked calls) that you acquired before SRS took off, no amount of slippage would have saved you. Conversely, if you were long SRS from the expiration of October options to expiration of November options, you would have cleaned up regardless of slippage that would have occurred over that 30 days. November was an extreme example, but you can still make money on the 2x, even if you hold for awhile. You just have to realize going in that time is working against you. Of course, if we ever get back to a lower volatility market, buying puts on the 2x shorts would seem to be a pretty good strategy.