ETF Pairs short trade for 2012

Each year I put on an annual trade to short 2 different ETF pairs: $TNA / $TZA and $FAS / $FAZ. The thesis behind the trade is a simple play on decay but requires a strategy to own Puts and then make weekly/monthly option sales/buys to lower cost basis on each piece.

For 2012, here is the price decay information on each pair:

$TNA / $TZA had a price decay of $8.08 as a pair for 2012. Based on a $50K position size for each, here is the price performance (does not take into account any particular trade, just pure price change):

TNA_TZA_2012Here is what it looked like to begin 2012:

TNA_TZA_2012_JanThe performance for $FAS / $FAZ was a bit different in 2012 as the banks really ran into year-end. This pair had a price gain of $8.05 for 2012. Here are the specifics:

FAS_FAZFor 2013, I have once gain put the short pairs trade on for each by owning longer dated Puts. I will continue with the same process of selling/buying options to lower the cost basis throughout the year.

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