odin

FAS and FAZ: A Short-Seller's Dream?

These trades work great in theory but even if you manage to re-balance them every day (like the ETF itself does), the transaction costs (borrow) will be pretty high.

Trading options is also not a risk-free arb (take a look at the vol on these). You could create synthetic shorts by buying the put and selling calls to negate some of the premium costs but again, in practise, I would be surprised that anyone has been eating this lunch in a riskless manner. (High transaction costs due to frequency of trading and spreads).