Update May 5, 2010:

We have closed all our short puts on LQD (June 105, September 106) with nice profits on May 4. We also sold all LQD (US Investment Grade Corporate Debt ETD) in our cash accounts (May 4 + 5).

Reasoning: We are uneasy regarding the high proportion of bank debt in LQD. Reports suggest JPM (JP Morgan Chase) has an exposure to PIIGS (Portugal, Ireland, Italy, Greece and Spain) of almost 70% of its tier-1 ratio (with other banks not far behind). Recent events in Greece seem to infect other indebted countries to the effect that the careless attitude towards risk may reverse.

We remain long 29-year US Treasury bonds and STRIPs. In accounts eligible for options and short selling we remain short the US equity market via SPY bear call spreads.