selling calls on the FAS and the FAZ

Some of you may have considered selling both the FAZ and the FAS leveraged etfs in order to capture the time decay that is eating these 2 products and will make them both fall to zero, as you can see in the shot above, since august, the FAZ went down 26% while the FAS went up only 20%, if you have bought both you would now have an unrealized loss of 6% but if you shorted both you would have had a risk free profit of 6% but you first have to find a broker that is willing to let you short them, there are 2 brokers that let traders do that, they are Thinkorswim (now owned by Ameritrade) and Interactive Brokers, there are certainly other brokers but these two are the most advanced even if their conditions make this arbitrage not very profitable since the interest charged on shorting them is ridiculous, in the case of Thinkorswim, you have to phone in order to short a stock or an etf which is quite laughable in 2010.

The solution to this is to sell call options on both, you can do that on TOS and IB and as its just options and not stocks/etfs, there is no interest involved. i don't need to tell you though that you first have to try it on a demo account to see if there are any strings attached to this arb trade, for those who are lazy, i will do it myself and bring you the result. stay tunned.

Dividend hike at Siemens

BERLIN (AP) -- Hefty one-time charges pushed Siemens AG to a loss in the July-September quarter, but a recovering global economy fueled a healthy rise in new orders and earnings for the company's full fiscal year increased, the industrial conglomerate said Thursday.

Siemens said it lost euro396 million ($545 million) in its fiscal fourth quarter, still better than a shortfall of euro1.06 billion a year earlier.

At the same time, revenue was up 8 percent to euro21.23 billion from euro19.71 billion, and new orders climbed by a quarter, rising to euro23.47 billion from euro18.75 billion.

The strongest order growth of 40 percent came from the company's energy division, as global energy markets improved and more large orders were received, Siemens said.

"We are coming out of the economic downturn with full momentum," CEO Peter Loescher said. "Our growth is gaining speed."

Siemens, based in Munich, makes everything from light bulbs to trams and turbines for power stations.

The company already had said in September that it would take a charge of up to euro1.4 billion to reflect revised growth prospects at its health care diagnostics business.

On Thursday, Siemens said it had taken a euro1.2 billion charge -- in addition to charges of euro383 million in charges to complete staff cuts at its information technology unit.

The company's sectors, or operating, profit for the quarter was down 45 percent at euro1.06 billion from euro1.92 billion. For the full fiscal year, however, it was up 4 percent to euro7.79 billion from euro7.47 billion.

Full-year net profit came in at euro4.07 billion -- up 63 percent from euro2.5 billion in 2008/2009. Revenue was down to euro75.98 billion, a 1 percent slip, but new orders rose 3 percent to euro81.16 billion from euro78.99 billion.

Loescher said in a statement that Siemens expects to "take this positive momentum into the next fiscal year."

"We expect clear growth in new orders compared to fiscal 2010," he added. "Also, revenue should again grow moderately. We expect to continue the positive trend in earnings growth."

The company said it had free cash flow from continuing operations of euro2.99 billion for the quarter and euro7.11 billion for the full fiscal year -- compared with euro3.79 billion in the previous year.

It said it is implementing a new growth targets system, dubbed "One Siemens," that will put the company on course to focus on "innovation-driven markets like environmental technology, the high-growth emerging countries and the service business."

Siemens said it has now defined a "clear dividend policy" for the first time and plans in future to distribute between 30 and 50 percent of its net income to shareholders. It said it will propose a dividend of euro2.70 for the 2010 fiscal year, up from the previous year's euro1.60.

Don't buy GM stocks

General Motors is planing an IPO to sell 1.6 billion of stocks to who ever foolish enough to buy them. There is one think you shouldn't do and it is to buy stocks of a bankrupted company or you risk losing everything. Look at the chart above, the GM stock went from $35 to $0.01 in less than a year and then it got delisted from the exchange, it means all those who had $350,000 worth of GM stocks at that time now have $100 (not kidding).