Worried About A Mortgage Rate Spike? You Have ETF “Options”

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October 1, 2009 9:16am NYSE:TBT

houseforsaleHouse hunters who may be worried that mortgage rates will rise before they can find a home to buy, may want to pay attention to a recent article written for the WSJ. Brett Arends, wrote a piece yesterday, where he details a scheme to protect you against rising mortgage rates through


 buying call options on the UltraShort 20+ Year Treasury ProShares (TBT) ETF.  Brett says, “People who worry that rates will spike again before they find a home can protect themselves by investing in a mutual fund that tracks long-term interest rates. Or they can buy call options on one of those funds instead. If Treasury rates suddenly skyrocket, you may make back what you would lose on the mortgage rates. This may sound like some incredibly complex footwork, and most people will shy away from trying these moves. But considering the cost of even a slight rate change over the life of a mortgage, they’re worth considering.”

For the full WSJ story click: HERE

 

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