With SRS, which is a shorting instrument, in order to buy to the trend of the short, one buys a call.
To buy against the inverse, that the market goes up, one buys a put.
Right now we have invested only in one position, with two buys made, and an average cost of 2.44, including commissions.
We intend to hold this position for a good period of time, unless we see a massive spike quickly that RAISES the price of SRS. The higher the price of SRS goes, the more this option gains in value.
Simply watch a quote on SRS to see how it approaches 20.00.
Recently we bought SRS itself, at the 19.85 range, and sold at 23.40. SRS has a natural resistance area at 25.00. Blue Chip made this profit of 18% up holding the position less than 5 days. That's short term trading.
The core reasons we believe the real estate market is still seriously broken are twofold:
1. There is a glut of foreclosure and "built and shrink wrapped to sell later" (seriously) home inventory across the country.
2. The commercial real estate market is the next massive bank bubble to burst. Banks, and insurance companies have loaned real estate investing companies billions as the multitudes of mini malls, and mega malls have proliferated in the last few years.
Tenants/retailers are already in arrears, or in negotiations with their commercial landlords, for "rent reductions".
As savings grow, as unemployment rises (but earnings are good) disposable income that fills the retail coffers at these malls will fall. As always, we simply overbuilt and thought it would last forever.
We trade SRS a great deal, often in advance of "housing news" (always good :) or as we see more and more unravel.
