Expecting downturn in S&P 500 – how profit from it?
by Tatabear | April 25, 2012 11:13 am
Hello All,
I am expecting a significant downturn in the equity markets. I would like to profit from this. Can anyone suggest a fund or some other instrument that is designed to go up as the S&P 500 goes down?
I am aware of one such fund: RYURX (recommended by one fo the Money Morning[1] guys.
THanks much. Bill Gehl (Bucharest Romania[2])
Endnotes:
- Money Morning: https://www.stockgumshoe.com/tag/money-morning/
- Romania: https://www.stockgumshoe.com/tag/romania/
Source URL: https://www.stockgumshoe.com/2012/04/microblog-expecting-downturn-in-sp-500-how-profit-from-it/
SPXU – it’s an ETF that is leveraged at 3x the inverse of the S&P 500. If S&P 500 goes down 1% for the day, SPXU goes up 3% for the day.
SH is 1 for 1 inverse of S&P 500. Note these are highly risky.
SDS
DXD
Well, you could always buy puts on SPY. The June quarterlies are cheap, if that fits your timeframe, although I’ve been expecting that particular correction for a while now, and the June quarterlies weren’t nearly as cheap when I got them, so maybe you want more time to work with.:)
You can use them as the base of a recurring spread, if you don’t get your expected results soon–sell, for example, OTM weeklies against them.
Not advice, of course, just thoughts.
THanks Cavebear for your suggestions. I’ll have to bone up some before I completely understand the suggestions – even the vocabulary. You are clearly much more sophisticated than I in investing know-how.
I have a significant amount of shares in the SH (Short Shares). It goes up as the S & P 500 goes down. This is a Pro-Shares Fund and has a longer history than many of these inverse funds and a larger market cap than most. If you look at the chart, it flew up almost over night in August of 2011- up to about 44.00 a share, about 34.25 as I write this. In the recession of 2008- it went up over 90.00 a share in Nov-Dec, and on the crash of the first quarter of 2009, it actually hit a 100.00 for a moment. I would buy this and expect a dramatic increase by the end of year (15 to 18%?) and then the 2nd 15 to 18% after the USA hits that fiscal cliff next year. I currently own no other stocks as I am very much a believer that this market is going to pull back significantly. I hate the waiting, just research, no trading, waiting for the down turn. Then I will go back in, buy MANY things, as everything on sale! I have the wheels off on the stops now, but as it rises, I will put in stops to automatically sell if it drops. Believe me, if it hits over 90 I would sell and never look back!
If you expect the S&P500 to go down, you’d buy call options on SDS ProShares UltraShort ?
Janet has made me back up the truck on this one.