Wednesday, May 9, 2012

Adding Leveraged Bull ETFs to Equity Model Portfolio

Although all of the positions in the equity model portfolio are short and all at a gain, I will be adding FAS (Financial Bull 3x leveraged) and TYH (Technology Bull 3X leveraged). Although the primary positioning in the equity portfolio is short and on any market bounce I'll be looking to add to those shorts, I see the leveraged long ETFs as any easy way to use some leverage and hedge those positions on a potential bounce as the charts are starting to look a lot cleaner than they have been.

these are not long term positions I'm adding, they are only for a bounce and they will not be very big, maybe 1/3rd a normal position size.

I choose Technology because my gut feeling has always been that the last bounce in the market would be tech and AAPL led. I choose FAS (3x leveraged long financials) because as you know I'm very tech heavy in my short positions whic are at a decent gain, I have no financial short positions and I think having a financial long on a potential bounce will make up some gains that I have missed out on not having financial shorts already in place.

Assuming we get the bounce, and I wouldn't be putting on these positions if I didn't think the probabilities were good, I'll close the leveraged longs in the equity MP as well as the AAPL calls in the options MP and add to short positions there (in to price strength). I'll need to add Financial short positions in the equity MP as I'm moving more toward pure equity shorts and less leveraged trades (although these are leveraged, you remember how many I have used in the past during the market chop.




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