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What happens if you buy or write options on an underlying and then it disappears, is delisted, or simply stops trading? FAS is about to get a 1:5 reverse split. What if I have 1 contract on it? would it become 0.2 contract?

I figured out how to use PM for option trading and get high leverage. At IB, the PM only looks at the underlying. So if you do a diagonal spread, sell a far term call and buy a near term far OTM call for pennies, the margin requirements all but cancel out. So PM is great for 1:1 spreads. Is...

I suspect PM is hyped up. You may get 1:6 leverage, but that requires an almost market-neutral or broad index based porfolio. Once the hedging is skewed, the permitted leverage drops and margin shoots up. Shorting naked options is almost prohibited.

I'd like to share my experience with portfolio margin on short options and solicit yours. What I learned recently, to my surprise, is that PM is very bad for option writing. With RegT, the rule is clear: 100% * option market value + (20% * underlying market value - out of the money amount...

http://www.interactivebrokers.com/en/general/poll/poll.php?sid=4696

I'd think more traders are watching the TA of the underlying index than the levered etf, which is a derivative. Still more are watching the stocks comprising the index. By and large SDS is pegged to SP500 -- if the values diverge, arbitrators will create or redeem shared to bring them in synch.

pare –verb (used with object), pared, paring. 1. to cut off the outer coating, layer, or part of. 2. to remove (an outer coating, layer, or part) by cutting (often fol. by off or away). 3. to reduce or remove by or as by cutting; diminish or decrease gradually (often fol. by down): to...

Technical analysis is meaningless with levered ETF. This is not because of the decay but because of the reset. Technical analysis looks at the price history. Essentially, we assume that the underlying price chart has memory so you can see the future from past patterns. But due to the daily...

FAS went from 2.7 in March to 12 in May. You will need enough capital to sustain the loss on shorting.

Guys, go vote for displaying indicate rates in the shortable column. Indicative rate in the shortable column http://www.interactivebrokers.com/en/general/poll/poll.php?sid=4674