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I'm not Jeff, but I'll take a stab at answering your questions, since nobody else has thus far.

I still don't feel comfortable with shorting shares so I'm looking at the synthetic short option.

Well, if you're willing to go with a synthetic short, then you're essentially saying you're willing to short the stock, and not only that, but you're willing to short 100 shares of it (since you can't really short less than 100 shares with a synthetic short). I'd say if you're a bit squeamish about shorting it, you might be better off with the direct short but with a smaller allocation.

1. The original rec' back in 2011 was a synthetic short. The Catch-up trade today says to "sell short 1.6%". Does that mean that the synthetic short is no longer recommended?
3. Regarding allocation with the synthetic short, should this also match the 1.6% allocation? So based on a $105 strike, one contract for every $650k? Or should we use the original allocation of 3% (one contract for every $350k)?

No, I'd say that it probably doesn't make much difference whether you go with a synthetic short vs. a direct short in order to be in keeping with the current recommendation. But the currently-recommended allocation is 1.6%, so, as you observed, that would be 100 shares (or one contract of a synthetic long) for each $655,000 that you manage. But if you want a smaller allocation, you'd need to go with a direct short and a smaller number of shares. OR, you could set up a bearish spread (which is what I've done--and I'm currently in my third iteration of that).

1. I noticed a different strike price on the bought put for the non-IRA ($20) vs. IRA ($15) recommendation. Is there a reason why I shouldn't do a modified version of the non-IRA synthetic short with a split strike: BTO $15 put and STO $20 call?

I think the risk here is that the put might continue to be out-of-the-money, and therefore end up worthless by expiration. I'm not saying for sure that that WILL happen, just that it might, and you'd end up with a sub-optimal experience in that case. It seems to me to be better to stick with the same strikes for a synthetic short. What I did recently in my IRA (which might not exactly be what Jeff would recommend) was to set up a synthetic short using the $15 strikes, and then I bought a $25 call to make it allowable in an IRA.

Personally, I've been in a direct short on FAZ (for a relatively small number of shares) for a long time, and this position has been very profitable for a very long time. Just take a look at a 5-year or 10-year chart of FAZ--this thing has a tendency towards declining values like nothing else I've seen. Of course, when it has an upward spike it can really jump (because it is leveraged, after all)--and that's the best time to short it.

I hope this helps,

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