Preparing For Bank Earnings Next Week With XLF

JPM reported earnings today and the market was disappointed, bringing XLF down. Next week, several other major banks and financial institutions will report, including MS and GS.

These are particular interesting as JPM reports deteriorating trading income.

These are in-the-money and out-of-the money straddles for next week:

Options are dangerous and may cause 100% loss (not the ITMs above though, which may only cause "significant" losses. Please do your own due diligence.)

ETFs For the Downgrades of Italy, Belgium, Spain

As our readers know, we track all global ETFs live here.

Yesterday, the ratng agencies downgraded Italy, while the exptactions were for Belgium. The ETF for Italy is EWI:

The ETF for Belgium the aptly named, EWK:

Note that they are strikingly similar.

As for Spain, it is EWP:

Natural Gas Contango Spreads Even More, Bad For UNG

Here is the current natural gas situation: contango of 8.53% in the front two months. Terrible news for UNG. The correlations are very high as contango causes UNG to swap for fewer and fewer contracts..

Bank of America, BAC's Kiss of Death

BAC has announced it will impose a $5 monthly fee on debit cards. We cannot envision this fee lasting for very long as the backlash will be horrendous for the bank, a la Netflix.

It is truly a sign of desperation and that the bank must be severely cash-strapped. If my bank did that, I'd switch banks right away.

It's not like people have much love for banks these days anyway. What were they thinking?

There is nothing to like on BAC's chart:

Below are straddles for BAC and XLF, computed with the wonderful StraddlesCalc.

Not advice! Options are dangerous and may cause 100% loss. Please do your own due diligence.

Nat Gas and UNG Falls off a cliff, attacked by all sides: Huge contango, hurricanes, storage

UNG is falling off a cliff today, as pretty much expected here. It is suffering from an attack from all sides.

Meanwhile, there are no expected hurricanes in the near future:

Storage numbers were released today, showing a large injection of 11Bcf.

Contango today is nasty, at a whopping 7% for the two front months (December and November)

Bad news all around for UNG.

Total breakdown in Germany: Parliament passes bailout that majority oppose

In a sign of complete disconnect and breakdown between politicians and the people they are supposed to represent, the German parliament has just backed the expansion of the European bail-out fund.


523 politicians voted in favor of it, 85 opposed, three abstained.That is 85.6% in favor.

However, a poll released yesterday showed that 75% of Germans opposed any new bailout measures. The WSJ reports: "A poll for national German broadcaster ZDF earlier this month shows three-quarters of Germans are against the expanded European rescue fund that's subject to Thursday's vote."

EWG is the ETF for Germany, FXE the most popular for the Euro.

We also track global countries ETF live and global currency ETFs live:

More Leveraged ETF Torture: 2X ETFs Become 3X ETFs

As if we needed more leverage!

Direxxion is changing its 2X ETFs into... 3X.

"Currently, the investment objective of each of the funds with “Bull” in its name is to seek daily investment results, before fees and expenses, of 200% of the fund’s target index. The investment objective of each of the funds with “Bear” in its name is to seek daily investment results, before fees and expenses, of -200% of the fund’s target index.
Effective December 1, 2011, each fund’s investment objective will be changed to seek daily investment results, before fees and expenses, of 300% or -300% of the performance of its specific target index".

The fact that 300% actually means 4X is too complicated math of course.

The higher the X, the faster the ETF's value goes to zero.

At least it's tough to do 4X though, as the fund risks having to drop it's value to zero in a single day if the market moves 25%.

Bad for UNG: huge natural gas contango to december

This is the current situation with natural gas contango:

It is currently 0.65% for November and October, and a whopping 7.2% from December to October. This implies prospects of prices rising, however, the contango is very bad (high) for UNG for December. Not good.