Darwin vs. The Fed. Guess Who’s Losing…

by Darwin on September 22, 2011


So, a few weeks ago, I publicized my crusade against US Treasuries whereby I was shorting naked call options on the 3X Leveraged ETF for long duration government debt.  That’s a mouthful. In essence, with rates at record lows, driving mortgage rates to never-before seen levels, I figured that was it.  With our debt problems and generational low rates, how much lower could they go?  Evidently, much lower.  See, this week, the Fed dreamed up “Project Twist” and the twist is, that instead of spurring a market rally and more borrowing, it sent markets into a complete tailspin and banks aren’t lending crap.  They’re preserving capital and trying to keep their firms solvent.  So, when you play with fire, you’re bound to get burned.  At the moment, my naked calls RIGHT at the strike price of $75 with November Expiry.  What that means is that if TMF didn’t move at all from here, I’d actually still make money because the options would expire worthless.  However, I have a bad feeling this flight to safety into Treasuries may continue.  So, “on paper”, I’m down a good $1000+ on that brilliant play – because the options I sold are much more valuable now that they’re “at the money” rather than out of the money.  The question is whether I can outlast the Fed.  If that was tough to follow, the whole play and background are described in my post over at ETFBase, my site dedicated solely to ETF investing, trading and news.

Lest you accuse me of only reporting my great news and wins, I have plenty of turkeys in my trading history and so far, this is shaping up to be one of them.  With that, check out some of my favorite reads from around the web recently:


Favorite Reads

 The Burning PlatformGreat Investment Warren

Invest It WiselyPlanting a Seed of savings

Retire By 40401K vs IRA Investing

Financial SamuraiWe Are WallStreet Email

Money CrashersGet a Workout Without a Gym Membership

Oblivious Investor2012 Tax Brackets

Money MambaRespect Your Money

101 CentavosGold Miners and Valuations


Carnivals that Featured My Content


Carnival of Personal Finance

Festival of Frugality

Carnival of Wealth

Totally Money

Canadian Finance

Totally Money Carnival

Yakezie Carnival



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