Wednesday, December 02, 2009

TZA system trade update




Reversal "Go Long" level @ 11.77


Strategy note:

"They," recently lifted margin requirements for TNA/TZA to triple regular margin requirements, apparently in an effort to destroy any semblance of leverage advantage for ordinary investors.  Thus you may as well stick with the underlying index, IWM, buying 3X the number of shares, depending on your brokerage commission levels. ("They," will probably triple commission rates on these etf's next).  


As far as I can tell, there has been no like adjustment on margin requirments for options,  either on the underlying index or triple leveraged etf, so therein may lie the best bang for the buck, as long as spreads between bid/ask on those options are tight.

For now I will continue to track TZA, but after a full pro forma backtest on deep-in-the-money options on IWM, it may become our index vehicle of choice and deep-in-the-money calls and puts as an aggressive trading strategy of choice.

 (Spreads on TNA/TZA are larcenous, don't even think about it).


A

12 comments:

Sean said...

Thanks, Allan. You're a prince among men.

Sean

Matt said...

Allan,

I have been following your postings for a couple of months. This is my first comment as I've been quietly reading and learning.

Thank you for your generosity of spirit. In difficult times such as we currently face, it provides a lift to the spirit to discover those who are 'givers' instead of 'takers'.

I look forward to learning from you and to the mutual benefits we may derive from that effort.

Matt (Cedar Crest, NM)

Allan said...

Matt,

Welcome, as a new active participant here.


Are you anywhere near the underground alien base in Dulce?

A

Matt said...

Allan,

No, I am between Albuquerque and Santa Fe - a couple hundred miles south of the Dulce base.

I have always wanted a tour if you have any inside connections.

Matt

Anonymous said...

Allan,

I am sorry if I do not understand everything you have said.

Are you saying that TNA/TZA , which follows the Russell, 3x, either way, will not be paying out as before?

Liam

Anonymous said...

Liam:

Allan does not make mistakes.

Anonymous said...

To the Above

I know Allan does not post anything ridicules here.
But you have!
I am asking Allan if I understood correctly,as I am not as keen as you are on trading jargon.
If you were a good soul, you might have answered me instead of slapping me on the wrist .

I still have no answer. I still do not understand fully what Allan means.

Liam

Anonymous said...

And by the way...

This blog is not only for seasoned traders.

This is also for people like me trying to learn.

Remember when you were learning? If no one answered your questions how would you progress to the great traders that some of you are today.

Maybe I shall join your league one day!

Liam

Anonymous said...

Liam,
https://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p119906.pdf.
jbg

Allan said...

Liam,

TNA/TZA will still be about 3X the IWM index. But it will take more of your account's buying power to hold those etf's then before, 3 times as much. Hope that helps.


A

Anonymous said...

Agreed.

There is an old story from the 1970's about Allan's ability to make money for people:

He once told a follower to jump off a bridge. The guy actually did so, albeit with some reserve, landed safely on a barge carrying soft waste, and walked off the barge with a cache of gold filled new "Pulsar" brand L.E.D. watches about $400/ each- big money in the 1970's.

These had been discarded by the mfr. by accident.

True story? Who knows only Allan and the other guy were there, but it has survived almost 40 years.

Food for thought.

John K.

Anonymous said...

Allanisms:

Allan lost money in a trade once, but he scowled and the markets gave it back.

When Allan talked, E F Hutton listened.

Tech stocks tanked when Allan finally got around to giving the bitches permission to tank.

Dubai went bust because they thought, maybe, Allan might have shorted the Middle East.

Ben Bernanke just revised his policy to, "Interest rates won't rise for the forseeable future, unless Alan says otherwise."