ETF to short the FTSE?

JohnRo

Quite solid resistance in the 5920 region currently and over the last 3 months or so, might give it a day or two and see if any sort of breakthrough occurs then just take the punt regardless.

I had been expecting to see a pull back from 5900 already so who knows what's going to happen...

sabretoothtigger

Dont short a dull market. Look again in Jan or Feb I think might be more reliable.

You have a combo of xmas lower volume and holidays but also big news via USA fiscal budget

I cancelled all my shorts on the last low and Im not aiming to renew them really as I feels like the calm before the storm.

Just my experience tells me its not a great idea, say go back to sept 2008. We had an official bear market july 2008, it then rose for 2 months and one day we had +10% on FTSE then it turned sour as expectations couldnt get any higher vs reality. That is when its smart to be pessimistic

Just recently Obama being elected was a high, great the guy is all about bailing out and easy money policy. Big jump up, all down hill

Nicholas-bloody-Parsons

sabretoothtigger wrote: »

Dont short a dull market. Look again in Jan or Feb I think might be more reliable.

sabretoothtigger wrote: »

Just my experience tells me its not a great idea, say go back to sept 2008. We had an official bear market july 2008, it then rose for 2 months and one day we had +10% on FTSE then it turned sour as expectations couldnt get any higher vs reality. That is when its smart to be pessimistic

Pretty good advice in hindsight!

I hope you cut your losses JohnRo??

Seems like Cyprus could be the thing which triggers some overdue weakness in the markets next week.

Any more recommendations on etfs other than PHGP & XUKS? My broker doesnt seem to offer XUKS.

sabretoothtigger

Yea I was looking back the other day.
My L&G FTSE fund fell from 151 in 3rd Sept 2008 to 100 or so at the end of October 2008, which is about a [strike]66%[/strike] 33% drop in 40 trading days.
Its an accumulation fund, so divs in there & now priced at 200.
Is that overvalued, not massively I reckon its been 5 years and Sterling is still going down

marathonic

It might be worth considering using Options to short the market.

Looking at the UltraShort S&P 500 (SDS), I see the bid on a June 2013 Put Option at a $44 strike is $2.06.

That means that, should the S&P continue to rise, causing SDS to fall further, then you have to buy 100 shares for each Put Option sold and pay $44 each on 22nd June.

Given that you will have received $206 for the sale of the Option, the net cost to you would be $41.94. That means that you'd start to lose money if SDS dropped 6% (representing a 3% rise in the S&P 500).

If SDS remains above $44 by June 22nd, you keep the $206 per Option that you sold.

Therefore, this represents a 4.8% return on capital at risk in 2 months. This is the maximum return and is achieved if the S&P 500 rises by no more than 3% between now and then.

JohnRo

Nicholas-bloody-Parsons wrote: »

I hope you cut your losses JohnRo??

Hit my stop losses, all my spread betting seems to just end up treading water or slowly sinking. Not the type to chuck in the kitchen sink on something like this though so no great damage done either way.

JamesU

Nicholas-bloody-Parsons wrote: »

Seems like Cyprus could be the thing which triggers some overdue weakness in the markets next week.
Any more recommendations on etfs other than PHGP & XUKS? My broker doesnt seem to offer XUKS.

Plenty of etf options to consider if there are serious EU jitters, long and short etfs on EU insurance (XSIR, XSIS) and banks (XS7R, XS7S) can be fun, +/-10-20% over short periods, days to a couple of weeks.

Lots of other sector db-x DJ Stoxx 600 etf long/short options too though but less volatile (industrials, oil and gas, utilities, healthcare, technology sectors etc) and then main indices themselves (eg dax etf short: XSDX, S+P 500 short: XSPS, others such as Eurostoxx50 (H50E/XSSX) etc etc).

JamesU

sabretoothtigger

Options always makes my head spin. There is probably a calculator to put all that into and it'll spit out a graph to show your breakeven points, etc
In USA retail investors discuss options, other avenues are blocked to them

SDS I object to because its probably already using options to gain that doubled gain. To then increase that is stacking things pretty high

If SDS remains above $44 by June 22nd

I think you've missed time decay or something
Isnt 4% a bad return, shorting is unlimited risk or is this a strangle, etc

marathonic wrote: »

It might be worth considering using Options to short the market.
.

I was going to use options to go long on gold in 2009. I didnt, would have been alot better then the etf i did use.
Shorting FTSE/£ is like going long Sterling, I realised later I didnt mean to do that

IronWolf

You can use CFDs to short the market. Dont need to trade on margin then, but have the option to if you want using shares as collateral.

marathonic

sabretoothtigger wrote: »

I think you've missed time decay or something
Isnt 4% a bad return, shorting is unlimited risk or is this a strangle, etc

Time decay in Options works to the sellers advantage.

As this ETF shorts the market, you want to go long the ETF to short the market.

To go long through options, you either buy a Call Option (time decay works against you) or Sell a Put Options (time decay works for you).

In buying a Call Option, your maximum loss is the cost of the Option and the profits are unlimited.

In selling a Put Option, your maximum loss is the Strike Price, less the funds received in the sale of the Option (and this only happens if the underlying ETF goes to zero).