If you have been anywhere near a computer, a tv or a newspaper (yes, they do still exist), you know that the situation in Europe is getting worse very fast. Today, Greek’s debt was downgraded to “junk” status with Portugal also having a downgrade of its own done by S&P. There have been many articles about the causes and consequences of such a collapse and I would personally recommend John Mauldin’s newsletter for the most “in depth” and interesting analysis. All of this is happening very fast and talk of a bubble even greater than the credit bubble that hit the world economy just a few months ago cannot be ignored. The fact is that Greece is far from being the only country with massive deficits and no easy way out of its huge debt problems. Will all of this result in the end of the Euro currency & Euro economic zone? It’s probably still very unlikely, but it does not look like the Black Swan it once was. It’s not that difficult to imagine a scenario where a few European countries get in major trouble and the Euro tumbles.

But there is also that possibility of a massive bail-out either by the richer nations such as Germany & France or by an international organization such as the IMF. So basically, volatility is back until this crisis gets resolved one way or another.

I thought I would like into a few of the ETF’s that would be good ways to play the crisis. Please note that since these strategies are short term ones, leveraged ETF’s could be very viable ways to play this.

Country or Region ETF’s:

It’s easy to imagine how having a short ETF on Greece could be the perfection investment. Unfortunately, no ETF on Greece exists, either long or short. So you have two options. Either using single country ETF’s on highly correlated countries. Spain and Italy are two that could follow Greece if things went wrong in Europe. You can also buy leveraged short ETF’s on Europe. Here are a few possibilities:

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Dividend Yield
EWP	iShares MSCI Spain Index Fund	$185,692,500.00	$39.09	(13.34)	0.56	26.99	5.21
EWI	iShares MSCI Italy Index Fund	$107,163,000.00	$16.90	(8.20)	0.55	24.977	2.55
EWQ	iShares MSCI France Index Fund	$293,508,000.00	$23.51	(3.83)	0.55	34.384	2.65
FEU	SPDR STOXX Europe 50 ETF	$42,522,100.00	$32.56	(3.66)	0.29	39.39	4.56
VGK	Vanguard European ETF	$2,555,648,000.00	$46.23	0.35	0.16	43.01	4.11
TUR	iShares MSCI Turkey Index Fund	$495,405,100.00	$59.28	15.88	0.65	121.216	1.41
EWG	iShares MSCI Germany Index Fund	$820,991,900.00	$21.30	(0.80)	0.55	35.065	2.61
EWU	iShares MSCI United Kingdom Index Fund	$1,074,812,000.00	$16.04	3.21	0.55	50.761	2.6
ESR	iShares MSCI Emerging Markets Eastern Europe Index Fund	$14,155,000.00	$28.05	7.71	0.6	#N/A N/A	0
GUR	SPDR S&P Emerging Europe ETF	$264,828,000.00	$45.24	9.09	0.59	70.518	0.44
EPV	ProShares UltraShort MSCI Europe	$45,612,500.00	$22.54	(5.90)	0.95	#N/A N/A	0
DPK	Direxion Daily Developed Markets Bear 3X Shares	$9,522,500.00	$14.87	(13.36)	0.95	-74.099	0

Currency

The Euro has already lost much of its value but many analysts expect the Euro to fall much further still. You can buy EUO, which is a leveraged short bet on the Euro.

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Dividend Yield
EUO	ProShares UltraShort Euro	$319,957,300.00	$21.77	13.32	0.95	-5.57	0

Volatility

If things turn sour in Europe, volatility across the world will increase so buying VXX would likely be a good way to play the crisis.

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Dividend Yield
VXX	iPATH S&P 500 VIX Short-Term Futures ETN	$1,444,407,000.00	$20.50	(45.23)	0.89	-80.483	0

Sovereign Debt

While Fixed income ETF’s have gained a lot of popularity and are becoming a lot more important, the variety available is still small and there are no ETF’s on Greek or even European sovereign debt. But selling PCY could be a good alternative as chances are that all sovereign debt would be hit in case of a European collapse, not just Europe’s:

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Dividend Yield
PCY	PowerShares Emerging Markets Sovereign Debt Portfolio	$586,668,400.00	$26.29	5.65	0.5	26.22	6.28

Sectors

Some areas, such as financials in Europe, would suffer greatly, here are some options:

Ticker	Name	Market Cap	Price	Return YTD	Fees	1Y Return	Dividend Yield
ERY	Direxion Daily Energy Bear 3X Shares	$70,679,150.00	$8.92	(26.95)	0.95	-72.247	0
FAZ	Direxion Daily Financial Bear 3X Shares	$1,084,984,000.00	$12.72	(40.09)	0.95	-85.942	0
EUFN	iShares MSCI Europe Financial Sector Index Fund	$2,174,000.00	$21.74	#N/A N/A	0.48	#N/A N/A	0

These are the main ways I could think of, but I would love to hear other ideas on how to profit from the Greece problems with ETF’s.

Similar Posts:

• Greece… the next Lehman??… what to do next?
• Think it was time to go short? Top May 2010 ETF’s
• Top stock Picks: Currency ETF’s
• Once A Run On Banks Starts….
• It Could Be A Lot Worse, We Could Be In Europe

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