Have you ever been to an amusement park, waited in a line for ninety minutes at the best rollercoaster in the land, finally stepped into that monstrous and fast vehicle, be taken for a ride and then in two minutes – it’s over? What an adrenaline rush. That is what the FAZ offers – some excitement but all thrills to the end. Will you lose some (or all) or hit the jackpot?
Some have been ‘playing along ‘ with me trading the FAZ of late. If you did not know, the FAZ is the triple bearish ETF, opposite of FAS. What strikes me most about playing this vehicle is the stocks that are in this – banks. If you needed an excuse to short banks then look no further than this essay by Josh Brown (heavy language, if offended do no read) to see why it’s easy. However, the chart offers a great appeal as well. In a world of uncertainty and high volatility look no further than FAZ to portray the landscape. On the far left side of the chart you find a calm, benign environment with only modest price movement. Look to the right and you see strong moves, a jagged chart and wild returns. The options traded offer extraordinary returns, but you have to be willing to hold on, even five minutes into the close.
[tentblogger-youtube Je7MqES4Wfk]
The chart below shows some excellent buy and sell points, specifically buys on the 50 ma and sells on big volume spikes. Let me know what you think and how you did if you traded it with me. We have had some triple digit gains on this in over a month – may just be getting started!
