1. Super Conservative Trading from 1/17/09 presentation followup…OOPs
Ken Hodor
8/19/11

2. Super Conservative Trading SSO presentation on 1/17/09
Volatility increases dramatically in plunge
Back testing does not indicate this problem
Spreads widen in Ultra ETFs beyond reason
Real money does show this and is quite a motivator

3. Stock quote and option quote for QLD on 8/9/11 11:46:35
BID
ASK
Ask-bid
Spread%
Exp
Strike
Ask-Bid
5.05
8.95
3.9
44%
11-Aug 65
2.94
4.7
1.76
37%
4.5
8.25
3.75
45% 66
2.11
4.9
2.79
57%
7.6
3.7
49% 67
2.28
5.3
3.02
3.85
6.55
2.7
41% 68
2.91
5.9
2.99
51%
3.25
6.1
2.85
47% 69
4.1
6.35
2.25
35%
2.74
5.35
2.61 70
3.8
6.95
3.15
2.46
5.15
2.69
52% 71
4.4
7.5
3.1
4.75
63% 72
8.1
3.05
38%
1.52
4.65
3.13
67% 73
5.6
8.3
33%
7.05
10.55
3.5
11-Sep
3.65
6.5
6.25
9.9 8
4.2
53%
6.15
9.4
7.35
43%
5.25
8.7
3.45
40%
4.95
7.75
2.8
36%
8.2
4.25
7.65
3.4
5.85
8.85 3
34%
4.45
6.8
2.35
6.2
9.6
3.95
2.4
29%
5.95
7.45
10.4
2.95
28%

4. What to do? QQQ option spreads still reasonable <$0.02 spread
XSProfits.com—Simple Margin Calculation 12/18/10

6. What happens? $40 insurance (max loss) protects $10,000 loss
Losses grow linearly in the Ultra
Calculator options gains grow geometrically
Bottom line: gains increase faster than loses

7. Conclusion
Use Adil’s 1/17/10 presentation recommendation with options instead of Ultras
If want to stay in a trade use the “simple margin calculator” from 12/18/10