This just in from the holy shit department.

http://www.etfexpress.com/2009/11/17/kelly-capital-launches-100x-leveraged-etfs

100x leverage is insanity. This product is just looking to give ETFs a horrible name.  Now you're going to hear the news about Johnny Investor going broke because he used ETFs as a vehicle.  Naturally, the particulars of the ETF will be left out giving the whole ETF industry a bad name.  I suppose we all know that ETFs aren't going away and people who take the time to understand the products and avoid crap like this will come out ahead.

UPDATE: This appears to be a hoax.  http://www.jasonkelly.com/2009/11/first-100x-leveraged-etfs.html

Funny.

I've been selling puts and calls around GE for awhile now. I got assigned sometime last year on some puts and have spent a lot of time sitting. My cost basis (not including premiums collected along the way) is $17.50. I wasn't real interested in taking a loss, so I've been waiting for the $18 strike to show a little premium. Ideally I wanted about 1% this month, but I took a little less and sold calls for $12 at the DEC 18 strike. I'm not going to be terribly disappointed if GE is called away, the premium + profit wasn't horrible all things considered, and I may start writing puts against it for JAN.

My long term MSFT double calendar is getting a bit interesting.  The short NOV 30 call is within range. The position is showing a pretty good profit, but I'm going to try and stick to the plan. If 30 is breached after expiration, I may hold the long call and sell another strike up to make a diagonal. We'll see, but I really didn't expect any of the options to be in the money at this point. If MSFT stays below $30 this Friday, all short options will have expired worthless, which means another good month.

So we bring in supposed "experts".  People who trade the markets every day, Nobel Laureates, economics professors, billionaires and more. These people come on the air as if what they say is any more or less valid than what you say or think with regard to the future. I'm not sure why these segments continue to air or the articles continue to be written. This is noise and nothing else. No one knows the next tick let alone what's going to happen next week, month, year. I've griped of it before and I'll probably bitch and complain about it again, this is nonsense and should be ignored. Reputable (if there is such a thing) outlets are the means of distribution. Your CNBC, Bloomberg, and Marketwatch blow this crap out as if it adds value. If you ever base any buy/sell decision on this, you're a fool. No exceptions.

OK, there, now I've taken my medication and will get back to my nightly reading and research.

I'm guilty. Yesterday while things were falling, I attempted to lower my strikes on IWM from 49/51 to 48/50 and get the same credit. I was close, but not close enough to get filled. I knew what I was doing, but tried to "outsmart" my trading anyway. This is usually a recipe for failure. That failure usually comes in the form of missed opportunities. This time I may be lucky, the market looks like it's going to head lower this morning and I may get a fill after all, but this was a stupid risk. It is simply psychology that must be dealt with. It is no different than a drunk refusing a drink and a fat guy turning down cake. It will forever be a challenge and there is no "cure".

The SPY trade is still on the table as well. I will evaluate those strikes after I right the wrong on IWM.

So far it's almost been like clockwork with this new trading system.  I mentioned that it averaged about a trade a month, and so far it's done that almost on the nose. Since this is a mean reversion system, the recent downdraft has flagged buys across the board. The averaging part of that statement should be paid attention to. Sometimes when the market is dive bombing, the system will flag a couple of days in a row as opportunities. Then in straight up mode, none for months. So I would consider this luck, so far. It could flag a trade or two this month.

So back to the trade at hand, SPY, QQQQ, IWM and DIA are all flagged. I reviewed all four and the credits on SPY and IWM were the best even though they weren't necessarily the most volatile. In fact, I would say QQQQ is probably the most volatile of the bunch but it yielded the worst credit. The second thing to consider is that the SPY NOV trade is still on, so do I want to expose myself to additional SPY risk? Well, IWM and SPY are pretty tightly correlated and the SPY has a little less volatility, so this becomes a pretty tough call. My plan is to take the IWM trade today and maybe the SPY trade tomorrow if we continue lower. Here's how they look.

 First IWM.

iwm-vertical-spread-dec-2009.png (43.70 kb)

And now SPY

spy-vertical-spread-dec-2009.png (45.00 kb)

Hopefully you're getting used to seeing the P/L structure of verticals. Each of these yield about the same credit and the distance between strikes is $2.00, which puts about $1.67 at risk.

Now the next trick is getting filled. The futures are pointing up slightly this morning, so a gap up may put these credits out of reach, but hopefully the market will rattle around enough today to fill. Things are changing rapdily as volatility has come back.

Will keep you up to date on the progress.

DISCLAIMER: This is not a recommendation to anyone to buy or sell.  I'm not a professional and I don't have much sense, so following me is hazardous to your finanical health.  The point of the post is to share ideas and hopefully get some feedback so that we can all improve our understanding of the subject.