Tuesday, July 26, 2011

The debt ceiling crisis: profitting through ETFs, either way, up or down

The debt ceiling crisis in the U.S. is  a prime situation for straddles. If the crisis is not solved, stocks will go down crashing. It is solved, then gold will come back down.

Straddles allow an investor to profit either way, up or down, provided the underlying stock moves a minimum amount.

There are straddles for August 2011, using three very popular ETFs: IWM (Russel 2000), GLD (gold), and FXY (Yen):

Please do your own due diligence. Options are dangerous and may cause 100% loss.

Monday, July 18, 2011

Commodifty ETFs: Cocoa

We track all commodity ETfs live here.

Ghana is the world’s second-largest cocoa producer. It announced today that plans to increase production to about 1.2 million metric tons per year by 2015 because of new tree plantings.

According to Bloomberg, As much as 600,000 hectares (1.48 million acres) will be replanted as part of a six-year program which ends in 2017, Yaw Adu-Ampomah, deputy chief executive officer of the Ghana Cocoa Board, said in an interview in Accra on July 15.

The board will provide the seedlings and fertilizers to assist farmers in the planting of new seeds, he said. The cost of the project is an estimated 200 million cedis ($132 million), with the government spending 126 million and the rest from companies including Mars Inc., maker of M&M’s,

Thursday, July 7, 2011

UNG options for today: up or down

Inventories will be released at 10:30AM.

Here are straddles (strangles) for UNG, for both July and August. These were computed with the free online StraddlesCalc tool.

The number indicated is the percentage move required for the position to be profitable, either way, up or down.


Inventories rose by 95Bcf, causing UNG to drop to $10.35. Here are the results:

ROI on August was +41%. This is higher than expected as options prices rise when the stock drops, the move needed becomes lower.

Please do your own due diligence. Options are dangerous and may cause 100% loss.

Natural Gas Contango Declines to 0.07%, Bullish for UNG

Natural gas contango has declined:

This is usually a bullish sign (but not always).

Current front months contango is  0.07%, much lower than the recents 1.5% to 2.0% range.

We will post options this morning before the inventories released. stay tuned.

Tuesday, July 5, 2011

Gold and Silver ETFs Rocket Higher on Portugal Cut to Junk

Please take a look at GLD:

A huge jump today as the price of gold has soared.

Moodys has just downgraded Portugal 4 notches to junk.

We track all gold and precious metals ETFs live here. This is what they look as of 2:40PM.

Monday, July 4, 2011

Another VIX ETF Bites the Dust: The "Stay Away From" ETFs

The list of silly ETFs grew by leaps and bounds last year, from the leveraged money-losing ETFs, to a number of volatility ETFs.

We track all leveraged ETFs live  here.

From Barrons "Speaking of over-engineered products, a Barclays Capital exchange-traded note meant to profit from rising stock-market volatility was put to rest Friday, after having fallen below the mandatory redemption price of $10. The iPath Long-Enhanced S&P 500 VIX Mid-term Futures ETN (ticker: VZZ) began life Nov. 30, 2010, at $30 a share and will be liquidated at $10, per the terms of the prospectus. This is a fine example of something that looks better on paper than in a portfolio."

"These VIX funds systematically sell nearer-term futures on the VIX volatility measure and buy more distant ones. And because the latter are almost always more expensive, the funds' net asset value steadily tends to erode. They are fine short-term trading instruments, but their inherent flaws as buy-and-hold investments illustrate how protection against abstract risks can't simply be downloaded to your online brokerage account."