The Traderszone Network

Indexuniverse.com is reporting that exchange-traded funds assets globally will top $1 trillion within two years. ETF’s attracted over $176 billion in 2008 and U.S. ETF assets already top the $500 billion level.

As of late 2008, over 1600 ETFs around the world had $658 billion in assets with more than 600 planned to launch in the U.S. and Europe during the next year. Additionally, another 274 related exchange-traded products are coming to market worldwide with an estimated $59.5 billion in initial assets.

At the end of 2008 most ETF products showed strong postive money inflows, although the first month of 2009 has showed some serious slippage. This indicates a number of major ETF sponsors have suffered slowdowns in key areas raising concern that the 18-month economic meltdown may be catching up with the industry.

However, during the last year, the money invested in ETFs surpassed 30% of the total volume of equities transacted in the U.S. And 70% of ETF use come in the form of replacements for stocks rather than substitutions of actively managed mutual funds. In addition, ETF assets are skewing more towards retail channels. Individual investors now represent at least half, and possibly as much as 60%, of the total ETF marketplace suggesting a deepening and broadening of the retail ETF market.

Equity option activity on the CBOE saw 1,194,387 call contracts traded on Wednesday, compared to 925,811 put contracts. The put/call ratio rose to 0.78, while the 21-day moving average slipped to 0.76. Gold futures have reached their highest price in 7 months as uncertainty over the bailout plan jump-started a new round of safe-haven buying. The April contract piled on $30.30, or 3.3%, to finish at $944.50 per ounce, while the front-month February contract gained $30.10 to settle at $943.80 per ounce.

Overseas trading has been dismal. Stocks plunged in Tokyo and Hong Kong with exporters and financials leading the downtrend. Strength in the Japanese yen helped pressure a number of companies. In addition, Japan’s wholesale inflation rate fell more than expected in January, dipping into negative territory for the first time in more than 5 years. In Europe, indices racked up their third day of losses as falling oil prices hold back the energy sector and corporate earnings create additional drag on stocks.

Against this backdrop, we again feel that the Direxion Shares Financial BEAR 3x ETF (FAZ) 09 MAR 65.0 covered calls continue to look interesting. They are currently up +4.93 to 48.48 and offer a 174.6% if unchanged annual return and a 585.5% if assigned annual return.