Trade Entered: FXI Xinhua China ETF

Today in a larger sized taxable margin account I sold FXI May 17 puts for .55 ($55) each. At the time of the trade FXI was trading at $25.15, the Dow was at 7631 and the S&P 500 was at 796. The margin maintenance requirement this far out of the money is only $290 per contract. We have downside protection all the way to $16.45. The return on margin (ROM) if these expire worthless is 18.96% (55/290) for 88 days or 78.64% annual.

China along with Brazil and Malaysia may be the only bright spots in a worldwide depression. This ETF has shown strong technicals after getting slaughtered with the rest of the emerging markets in 2008. We're bullish on China long term.

This ETF will have to drop 35% before we get hurt. That's possible in this market but we feel it's unlikely. Writing puts this far out of the money is the way we're playing the market right now. In addition, we'll look to add additional protective index puts in this account when we see a bear rally.