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

To: James Hutton who wrote (166995)	11/25/2008 2:22:46 AM
From: lisalisalisa	Read Replies (1) \| Respond to of 306849

Yeah, I know. I sold my SRS APR 85 calls at SRS 140 and gave up a HUGE gain. In any case I would not want to short a 2X ETF just to be shorting a 2X ETF, but instead I would want to also agree with the market direction AND try to play the slippage angle. For instance instead of going long SRS calls, I might buy April or June URE puts. URE is the ultra 2x RE bull ETF. I think the one thing SRS has going for it however is that when you are long the calls and SRS begins to gain momentum and go ballistic you get the benefit of large numbers and super compounding. And with options large numbers begin to make REALLY high priced options, and that is where the benefit of being long SRS comes into play...there seems to be another element to this, and its when the 2X or now 3X ETF's start to pick up momentum with consecutive large gains, you are benefiting from a geometric progression and compounding numbers game...I am not 100% certain of this, but just from typing this out I think I sort of explained to myself how being long can be an advantage, even with slippage. I think it is sort of the same phenomena of where a perfect short=100%, but a buying a stock at 1 dollar you can have multiple baggers, especially once the numbers begin to get very large...and this is how and why the 2X ETF's can really start to provide a nice hedge in a large and relentless downturn (or upturn, as the case may be)