Do Leveraged ETFs Cause Volatility?
By the eight-hour point in Thursday’s grilling of BP’s (BP) CEO Tony Hayward I had had my ~ up of representatives trying to top each other for the best fixed bite. I could feel the intelligence oozing out of me at the same time that each congressman turned oil drilling expert expressed their indignation and offence. I get it.
Now let the guy get back to fatiguing to cap the thing please…
But I digress. As usual.
It is time to clown on my capitalist hat and do what all good capitalists would translate in this situation: figure out how to profit.
There are commonly two widely-held views of the overall market: things are getting better, things are getting worse.
I’ll donate my Noble Prize with regard to Economics winnings to my favorite charity…me.
Let me add a third part view: the market is going to wander around for the nearest couple of months like a drunken sailor. And I’m discourse from experience…in both areas.
The correction from the April prominent was violent. The market sages predicted that this was the nearest leg down as the VIX spiked from the sleepy upper teens to the mid 40s. Cats and dogs living together, mass hysteria.
Except it wasn’t. Over the to come weeks and months we saw multiple triple-digit gains and losses being of the cl~s who the slightest news item drove the market. The market rightly sold done after the president touted great jobs numbers…for his company. The fissure was capped. It wasn’t. Hungary was going to default. It didn’t. The U.S. scored! It was a ligature.
Bottom line: we’re not going to know which way this place of traffic ultimately is going until it gets there. There goes my Noble Prize. As some options trader, I really don’t care which way the place of traffic is going because I can profit based on this uncertainty. With people options strategies you can be right two out of three ages and make money: market goes up, market goes down, and market stays flat.
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