Playing the financial markets is risky, and playing with housing derivatives is even more risky, as we’ve seen. But what if there was an exchange-traded security for retail investors — a derivative, but one without the derivative stigma attached to it?

That would be MacroShares, the brainchild of famed economists Robert Shiller and Karl Case. The securities reflect the value of the (already widely used) S&P/Case-Schiller home price index in ten large urban areas. Now that it is available, investors everywhere have the option of investing in the housing market, without taking on the exorbitant risk offered by previous instruments. As The Economist states:

The idea has merit. For most people, their homes are their largest single investment. Finding a way to hedge that investment makes sense. Falling prices are accentuated in illiquid markets such as residential property. Having some protection against price falls should reduce concerns over paper losses.

MacroShares are unique in that they offer two different investment options — DMM (MacroShares housing down) and UMM (MacroShares housing up), which is, just as the name states, the option to bet on the downward or upward movement of house prices. Though trading in both are has remained relatively light, there is some good news — more people are betting on UMM than DMM.