FAZ and FAS... financial ETF's

[peanuts]

These are triple ETF's based on financial stocks. Whatever happens in financial stocks in the ETF, the price will do triple the actual market move.
financials good = FAS up
financials bad = FAZ up
both ETF's value will decay over time

So here are my questions:
1) If you think financials are a good investment, is it better to short FAZ, or go long FAS?
2) If you think financials are a bad investment, is it better to short FAS, or go long FAZ?
3) Since they both decay, would it just be better to short both of them and let it run?
4) Would it be better to hedge either FAZ or FAS with call options on the other?
5) Is there some other solution?

[IIC]

These are triple ETF's based on financial stocks. Whatever happens in financial stocks in the ETF, the price will do triple the actual market move.
financials good = FAS up
financials bad = FAZ up
both ETF's value will decay over time

So here are my questions:
1) If you think financials are a good investment, is it better to short FAZ, or go long FAS?
2) If you think financials are a bad investment, is it better to short FAS, or go long FAZ?
3) Since they both decay, would it just be better to short both of them and let it run?
4) Would it be better to hedge either FAZ or FAS with call options on the other?
5) Is there some other solution?

Shorting both was already thot of...Fine if you don't mind answering margin calls: http://stockcharts.com/charts/perfor...DJUSFN,FAS,FAZ

[LemonButt]

These are triple ETF's based on financial stocks. Whatever happens in financial stocks in the ETF, the price will do triple the actual market move.
financials good = FAS up
financials bad = FAZ up
both ETF's value will decay over time

So here are my questions:
1) If you think financials are a good investment, is it better to short FAZ, or go long FAS?
2) If you think financials are a bad investment, is it better to short FAS, or go long FAZ?
3) Since they both decay, would it just be better to short both of them and let it run?
4) Would it be better to hedge either FAZ or FAS with call options on the other?
5) Is there some other solution?

I did some homework on this: http://spreadsheets.google.com/pub?k...Yw&output=html

The statistically most favorable thing to do as far as hedging for maximum return is to go FAZ short and FAS long with 0.27%. However, backtesting this proved otherwise due to the fact that both ETFs do decay over time as you mentioned. Here is a summary of my findings:

Both ETFs decay over time, however using FAZ short and FAS long since it's inception, FAZ short would be worth more than double your FAS long.

It is best to short FAZ or FAS depending on your take on the market. This is not surprising as people are more likely to sell and follow the herd rather than follow strong buying.

The most profitable choices are in green. The numbers are derived from single days of trading, but the same follows for bull markets as in bull days and bear markets as in bear days.

Since March 9th (bullish reversal of general market), if you took FAZ short and FAS long, you would have a 290% return today.

Since March 9th, FAZ short returned 30% higher gains than FAS long.

Bottom line: FAZ short is the best play you can make in a bullish market out of the four positions you can take.