The Weak Dollar, GM Losses and High Oil – Bearish Trades on ETFs

The Market news yesterday and today is somewhat discouraging. The trinity of bad news came in the form of GM taking a $37 billion dollar loss on their third quarter profits, China is considering dumping their considerable reserve of US currency for the stronger and more stable Euro and Oil surpassing inflation adjusted highs as it trades at nearly $100 a barrel.

Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_11_07_Short.mp3

This generally bleak overview may lead some investors into thinking the market values will stagnate or deflate. The covered call Investment strategy can be good if an investor thinks a particular stock or sector will increase in the coming months. A bear call credit spread or bear put debit spread can be the right tactic when an investor feels the value of a stock or sector is looking like it will deflate.

The question on the minds of many investors in the wake of the recent news is what direction will major blue chip losses, a weak dollar, and high oil take us. Also, it may be salient to discuss the reasons why these events are occurring.

GM largely blamed their losses on the lost tax benefits in the US, Canada and Germany. This is because the company will lose deferred tax assets. To qualify for deferred tax assets, the company has to be confident it will be produce taxable income in the coming quarters.

The weak dollar is explained away in a mantra aped by most investment analysts these days: China is soaking up increased production, world political uncertainty makes hard assets more appealing and the Federal Reserve’s policies have weakened the dollar’s value.

Potential Trades:
Where this leaves investors is a little puzzling. But many of the news reports seem to indicate investors as a whole are more bearish. To contribute to this view, we will offer some bearish trades on Exchange Traded Funds. If an investor is bearish about the market in general, or just about a certain sector, it is likely they will find an appealing trade among those listed below.

Here’s a list of the ETFs we searched for using the PowerOptions search engine.

The trades shown below are easily accessible to any investor with a PowerOptions membership. PowerOptions is an indispensible tool allowing an option investor to indentify trades quickly and efficiently leaving them more time for the important task of researching the market.

For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.

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[tags] bear put debit spreads, covered call investment strategy, investment strategy, poweroptions [/tags]