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How To Bet In A Euro Zone Break Up

|Includes: ProShares UltraShort Euro ETF (EUO)

Some kind of euro-zone break-up has become a possible scenario. Thus, an army of attorneys is already working on behalf of businesses trying to prepare for this.

In the same time, the biggest European banks are trying to figure out how to cope with the impact an exit of one or more countries from the euro zone would have on their derivatives positions in particular on credit-default swaps (CDS) on sovereign debt.

If Greece…or Spain…or Italy were to default on its debt, this would trigger a chain reaction of bankruptcies. Business banks, particularly European investment banks, could endorse massive losses.

One way to bet on this current risk is to buy shares in the ProShares UltraShort Euro (NYSE:EUO). This fund seeks to provide daily investment results (before fees and expenses) that correspond to twice (200%) the opposite (inverse) of the daily performance of the US$ price of the Euro. If the euro falls apart, EUO will be one of the biggest to skyrocket.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.