TMV, TMF, the bond markets, and me
I have now bought Nov puts on TMV and TMF. And even though I had to stretch to meet the Ask in each case, my timing has seemed pretty good so far. Of course, I am hoping that these two super-ultra leveraged ETF's see-saw their way down to single digits, a la the FAZ/FAS pair. However, TMV has everything going for it: enormously overpriced US Treasuries, looming high inflation, high deficits, growing foreign opposition to the USD's reserve currency status, and shrinking foreign participation in UST auctions. If there's a big drop in TMV, I intend to buy some and ride it to the next high. The problem with riding TMV to 1,000 (other than tracking risk, derivative market risk, etc.) is that the US gov't has enormous incentive to try sneaky methods of propping up Treasury prices. And they just may be able to pump UST's at times inconvenient for buyers of TMV. Still, until the derivatives market collapses, TMV, TMF, and their puts are fun ways to bet on the coming tsunami of inflation and interest rate hikes.
Related tickers: TMV, TMF