Stock to Short: Buy Calls on the SKF

by Michael Shulman | September 2, 2009 3:20 am

 

The bank stocks have finally hit a wall, and while many are not selling, most are not buying.

Take a look at call options on the ProShares UltraShort Financials (SKF) — the double inverse ETF on the Dow Jones Financial Index (translation: the bank sector goes down 1%, SKF goes up 1.5% to 2%).

Buying call options on a double inverse ETF is what I call a rocket-fueled trade. With SKF call options, a bad day for the banks could mean a 50% gain for you.

But, buyer beware — this is a very high-risk trade.

If you think you can stomach the risk, pick an out-of-the-money October call.

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Source URL: http://www.investorplace.com/2009/09/stock-to-short-skf/
Short URL: http://www.investorplace.com/?p=2707

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