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What do you think about buying long dated puts on the FXY? I'm a bit gunshy about using the inverse ETFs to the all the reported tracking problems. But buying puts on the long ETF should work, right?
ReplyDeleteI see the Jan 13 90 puts trading at .95 last. I haven't done much option trading, but my understanding in that case would be that we profit by the yen falling below 90 (in terms of the FXY at least). It's currently at 119.
Anyway, I'd appreciate your thoughts.
BTW, I do enjoy your blogging. I think it's some of the best material on Gurufocus. Esp. your coverage of the smaller miners and such. Hope you keep it up.
Meanwhile, Hugh Hendry worries the Yen will *appreciate* in a crises.
ReplyDeletehttp://www.ft.com/cms/s/0/cc20d6be-6cad-11df-91c8-00144feab49a.html#axzz1B7RSWHB3
"What do you think about buying long dated puts on the FXY? I'm a bit gunshy about using the inverse ETFs to the all the reported tracking problems. But buying puts on the long ETF should work, right?"
ReplyDeleteThanks for the comments.
I might be out of my depth on a trade like this. But I actually think money fleeing from the JGBs would likely push the Japanese stock market up.
90% of the money in the JGBs is from domestic investors. So they pull their money out of that and it has to go somewhere local......thus likely to the stock market.
So short the government bonds, and go long the equity market ?
That does make some sense. I think it would be a temporary phenomenon though, right?
ReplyDeleteBecause esp. as an export-driven economy, Japan cannot accept a strong Yen. As their debt costs escalate, they will be forced to monetize. So the equity market may rise in nominal terms, but in real terms it will eventually be crushed when they are forced to restructure.
I'm out of my depth too but keep us updated on your research.