For those of you not familiar with these ETFs, FAS attempts to track 3x the Dow financial sector index while FAZ attempts to inversely track that same index. The volatility in these ETFs is incredible lately. I’ve been bouncing in and out of them for several weeks now, and finally did pretty good in FAS over the last few days. I didn’t stay in for the whole rally, but I was in for two days and got about 80-90%. It was a nice gain.
Today, however, I did something stupid and lost a quick 10% in FAS. I jumped back in thinking that this thing had a ton of momentum, but it promptly dropped down and my stop order triggered. Now, I just jumped into FAZ! haha In at $40. We’ll see how this goes. I’m hoping to get ~20% out of it. I think we are due for a correction down soon. My plan was to hold FAS until the momentum ran out… get maybe 10% out, then jump in FAZ. Of course, things rarely go as planned. I’m in FAZ now because I really think we are due for a pullback given the quick run up we’ve seen recently.
I know a lot of folks are playing these ETFs because of the volatility. Let me know your thoughts on all of this.
