SOS Short US & China Part2

Part 1 - Jan 20 2010
SH - 51.00 (short US stocks)
FXP-8.00 (short China stocks)

Part 2 - Feb 5, 2010
SH - 54.00
FXP - 10.19

Action:

Sell HALF of FXP - make 27%. Then keep the other half at average cost of 5.81 . Hence the chance of it lower than 5.81 is remote, historical low is 7.00. Historical high is on Mac 6, 2009 which is above 100.00

Why don't we try out

TWM - 27.50 @ 5 February 2010

This is the inverse ETF of Russell 2000 stocks of US. It track the Russell 2000 on double inverse basis.

150 shares x 27.50 = 4125

Say your expectation is that Russell 2000 will drop 30% in 2 years, hence, you may gain from TWM at least 60%. Try working out this strategy,

Sell

50 shares when it reach 34.40 or 25% gain (hence remaining cost is USD24.00 per share)

50 shares if it touches 41.25 or 50% gain from original cost of 27.50 (remaining cost is 6.70/sh)

Hence remaining shares holding cost is only 6.70, you may keep for long term, 2 to 3 years, to make the extra ordinary gain of 2 to 3 times your original costs of 4125.

Its 52 weeks high is on 6 March 2009 = 116.00 per share

Its 2 year high is in November 2008 = 168.00 per share

What is that chances of happening again? POSSIBLE I think. 50:50, hence if it does achieve say 116.00 per share , you actually make a total gain of 5465 gain or 132% of 4125 original cost.