The FAS and FAZ Make Stock Market Volatility Look Like Child's Play

March 12, 2009 4:25 PM EDT
Since Monday, when several news items (1. Citigroup (NYSE: C) said it would be profitable, 2. Fed Chairman Bernanke addressed mark-to-market issues, and 3. Barney Frank said he expects to see the uptick rule back sometime within a month) sparked an on-going rally in financials, volatility in two 3x leveraged ETF's has been off-the-charts. The Financial Bull 3x (NYSE: FAS) and Financial Bear 3x (NYSE: FAZ), two fairly new ETF's, have had double-digit percentage moves in 2 of the last 4 trading days.

The FAS has nearly doubled since Friday of last week, moving from $2.64 to close at $5.05. Meanwhile, amid the turmoil at Citi, AIG (NYSE: AIG) and Bank of America (NYSE: BAC), the short financial fund, the FAZ sunk from as high as $109 on Monday to close at $41.52, a drop of about 62%.

The volume in these names has also been extreme this week. For example, the FAS traded nearly 300 million times today, compared to its average daily volume of about 150 million shares.

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