Investing for the Rapture

(Note for the humour-impaired: this post is not investment advice; this post is comedy. Carry on.)

As you should all know from extensive news coverage, the Rapture will arrive at 6pm on Saturday, and God will take all of his chosen people up to heaven for the least alcoholic Saturday night ever. Those who choose to turn away from him, however, will be left on earth for six months of unrelenting torment (and Facebook-organised looting – 455,518 people attending!) before “God destroys earth and its surviving inhabitants” on October 21st.

The important question – and I’m surprised that CNBC hasn’t asked it yet:

How should I position my portfolio to profit from the Rapture?

So here’s a few trade ideas, organised by asset class for your convenience, that could help you position for God’s judgment upon the sinners of the world!

In FX:

Short AUDUSD: the AUD will abruptly lose its yield premium to the USD, because neither the RBA nor the Fed will exist after October 21st. This will lead to a sharp unwind of speculative positions in the AUD carry trade.

Long BRLCNY: because the rapture will start at 6pm local time in every timezone, Asian emerging markets will be the first locations where God starts smiting heathens. Thanks to its timezone advantage, Brazil will be smote later in the day, and may even escape the smiting altogether if God gets bored halfway through. Long positions in BRL against Asian emergings will pay off if this happens, and throw off substantial carry yield for the remaining six months of infinite torment if it doesn’t.

In rates and credit:

Sell long-dated USTs: part of the appeal of USTs is that the US government has never defaulted on its debt. However, the Treasury might find itself unable to pay after October 21st when God disintegrates it along with the rest of the Earth. This trade should be executed in cash bonds rather than CDS, though; a “failure to pay” trigger under these circumstances – namely, the US treasury being destroyed by the wrath of God – would also mean the CDS counterparty is unable to pay out on the swap. (This is perhaps the best-ever example of wrong-way risk.)

Incidentally, Bill Gross of Pimco has publicly stated that he’s heavily short USTs; he hasn’t clarified whether this is a Rapture-related trade.

Sell zero-coupon corporate bonds maturing after October: because the Earth will be destroyed in October, the issuers may experience difficulties repaying the principal on these bonds.

Buy Greek govvies maturing before October 21st: only those who are pure in the eyes of the Lord will be raptured on Saturday; those who are dishonest and impure will be left on Earth until October 21st. We consider it likely that the Greek treasury will be fully staffed through October.

In equities:

Social networking pairs trade – sell LinkedIn, buy FriendFinder Networks: the only people remaining on the Earth after Saturday will be sinful heathens – the perfect target market for FFN’s largest network, Adult FriendFinder. LNKD, on the other hand, should see its multiples plunge from current nosebleed levels. At its current P/E ratio north of 1300, LNKD is priced for years of exponential growth, and the destruction of the Earth in October will severely hamper LinkedIn’s expansion plans.

And my favourite Rapture-ready trade of all:

Sell Dec11 $70, $85 and $95 SPY calls: the Earth’s destruction in October will also cause every stock on Earth to drop to zero, sending the SPY to zero as well. Selling deep-ITM calls on SPY will let you pocket the maximum amount of premium upfront, so you can blow the lot in the six months before God disintegrates everything and the options lapse.

So what are you waiting for? Call your broker today – because he’ll be sitting around in heaven tomorrow!

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