Shorting the S&P 500 index
Looking at the unbelievable Valentine’s Day rally in the stock market, I decided the market might be heading for a correction. I read somewhere that smart money had the highest amount of short futures contracts since May of last year, when the market corrected quite a bit.
The easiest and cheapest way to short the S&P 500 is to buy a Profunds Inverse Market Fund like URPIX. It has amongst the lowest expenses for funds in that category and if you buy through TDAmeritrade, there are no fees to buy or sell. Not only that but $10k minimum is also waived.
The only problem is that it takes about 3 days to get in or get out of this trade, a move that may have been implemented to prevent people from daytrading mutual funds.
Anyway, I finally got filled friday at a price of $13.29. Lets see if this trade works out. I’m not really good at timing the market and as seen by my WCI puts, I’m actually quite terrible at this sort of thing! But since I don’t want to sell any of my stock, this way, I’m hedging my bets. But hopefully, I can get better at this sort of thing.
Speaking of WCI, Bill Gates’s foundation announced they were bailing on it but that didn’t help. The stock still went up! Its up 30% since October!
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February 19th, 2007 at 11:18 am
Why not buy QID (is there an SP500 equivalent ETF)? Or go short SPY or buy SPY puts? I really don’t see the market for a short index mutual fund that is relatively illiquid.
February 26th, 2007 at 6:45 pm
with puts you need to be accurate on the timing. plus sometimes the premium is too high to make it worth it.
this seems like a more mellow investment, especially if I’m wrong.