Thursday, December 1, 2011

Fisher/Gartman Introduce Volatility ETN's; Short 'em Both (ONN; OFF)

The headline is not a commentary on either Mssrs. Gartman or Fisher.We've posted on the joys of shorting both sides of leveraged ETF pairs in the past, links below. This isn't exactly the same but should be similar.
I will point out that the symbol for the 'risk on' ETN is also the acronym for the Onion News Network.
From CNBC:
Fisher, Gartman: New Way to Bet on Volatility 
Commodities traders Mark Fisher and CNBC contributor Dennis Gartman launched two exchange-traded notes (ETNs) on Wednesday that allow retail investors make quick wagers on the risk sentiment in the marketplace.

The securities—one for "risk on" and one for "risk off"—are a bet by the two veteran traders that global markets will continue to be subject to extreme day-to-day volatility.

“The Risk On ETN’s value is expected to rise when the outlook on markets and the broader economy is positive and to decrease when such outlook is negative,” according to a document by UBS, their partner in the new products. 

“The Risk Off ETN’s value is expected to rise when the outlook on markets and the broader economy is negative and to decrease when such outlook is positive.”
The securities, based on a risk index created by the two through MBF Index holdings, began trading on the New York Stock Exchange Wednesday with the catchy tickers “ONN” [ONN  25.73    1.73  (+7.21%)   ] and “OFF” [OFF  24.30    0.30  (+1.25%)   ]. The Risk Off ETN tracks the inverse of the index....MORE
See also:

Feb 12, 2011 
One approach is to short both of them, in effect writing an option. Ooops, have I said too much?