In my day trading account I can lever up the SPY 4x, the spread is a couple cents, I can buy or sell in the aftermarket, and I don’t have to pay margin if I close in the same day.

If I want to put on a levered position for more than a day or 2 I would use in the money options.

Right now being 50% long is crazy enough for me.

On the S&P500 I don’t really see any inverted head and shoulder pattern that suggests a bottom. I see some shoulders…but I see no clear head. Perhaps with a leveraged ETF there exists a head, but I wouldn’t base trading decisions on a leveraged derivative of the actual index.

895 on the SP500 Futures is a 61.8 retracement and I can certainly count out a completed initial move down from the 1007 highs as well as some short bullish RSI divergence….so perhaps we will get a decent bear market correction from 895-900 zone. I’ve covered shorts and am currently flat. My bias is to wait to see a rally to sell into…not be long hoping for a rally. However, I’m a fairly conservative technical trader….if I were a little looser I would certainly be taking a shot at a little length waiting on a bear bounce.

- AT

Did he really put half these clients’ accounts in these things?

The one problem now with deep in-the-money puts is that they often need to be VERY deep in the money. But over the last few years, my best trades were deep in the money LEAP puts.

I’ve been using put spreads, but they have their own timing problem. You either have to market time accurately, and/or be somewhat conservative. I was too conservative with some steel spreads. I had JAN 2010 70/115 spreads on MT that cashed out last month! (MT is now at 20. ;-) But there was no in-the-money puts available at the time that didn’t have a humongous premium. Needless to say, I didn’t expect it to crater that far, that fast.

- Schwab has a 30% margin maintenance requirement for the 2x funds I looked at.

- 3x leverage on 2 to 3 times margin gets you a lot of exposure fast, but man, it also sounds like a recipe for disaster.

OT – anyone like Schwab’s new site? I give it a B right now.

I understand (but have not verified) the argument about a kind of friction loss during directionless volatility. It does seem to be less than the simplest equation would suggest. (Where a 1% up day followed by a 1% down day results in 0.98*1.02=0.9996)
I use both URPIX and SDS. URPIX does stay much closer to its stated targets than SDS but because it is a mutual fund, it can only be sold at the end of the day.

As to why anyone would “speculate” in their IRA. I am at least a decade and a half from retiring and even after the rally on Election Day, my IRA was up nearly 60% for the year. Over 70% now. If I had followed Barry’s advice and waited longer before going short, I would be closer to retiring.