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Looking for a Wild Ride? Hop on the Euro

|Includes: ProShares UltraShort Euro ETF (EUO)

 The debt problems facing Greece, Portugal, Spain, Italy etc. have now entered the collective minds of the investment community. The Greek debt ship has sailed, and Spain is up next. Regardless of whether or not Spain could have actually met its rollover burdens through new debt issues had this crisis not come up, it now likely can't.

Buyers just don't want to be associated with Euro debt right now.

Sovereign CDS liquidity has increased (this is opposite of corporate CDS, since people usually don't need to buy a CDS on a developed country), bringing it to pre-Lehman levels:
http://av.r.ftdata.co.uk/files/2010/02/liquiditybig.jpg

CDS Spreads have shot up for SovX and Greece in particular:
http://av.r.ftdata.co.uk/files/2010/02/sovx11feb.gif

And in 2010 record levels of debt will need to be sourced by said countries, just to pay off existing debt! There is simply no way they can finance their debt load cheaply!

For about a week now I've been short the Euro through call options on EUO (a 2X inverse Euro ETF).
Tomorrow I'll most likely take a short Euro position in the futures market through: M6E (E-Micro EUR/USD futures)

original reference: http://www.opensourceecon.com/main/looking-for-a-wild-ride-hop-on-the-euro



Disclosure: Long EUO, Short M6E June