From the prospectus, which you read: http://media.proshares.com/documents/ProSharesProspectus.pdf
Principal Risks
ProShares UltraShort Lehman 20+ Year Treasury
is subject to the following principal risks:
⢠Aggressive Investment Technique, Risk Correlation
Risk, Counterparty Risk...
I don't like the liquidity on TBT. The tape is way too slow there most of the time. Might be right about the long trade, but if you need to smack a bid, there's no depth there. Also, I wouldn't discount completely the risk in the ETF instrument itself.
of course kudlow is a permabull.
he waltzes out of the studio with his multi-million dollar contract, gets into his bmw or lexus, has the driver take him to his fully paid off connecticut or new york home and his house staff is there waiting to ask him what he would like prepared for dinner...
you should know the answer to this beforehand.
one general rule of thumb is to close out credit spreads when they move against you by an amount equal to the credit received.
so, if you sold it for 2 and it moves to 4 on the ask, close it for a loss of 2, etc. if you sold it for 5 or...
i'm from philly. in jersey now.
sorry folks, i filed a moderator complaint about posting the exam questions like this.
also, i will not hesitate to call TOS tomorrow and tell them that the PM exam has been compromised.
i'm not afraid to take a new one, are you?
actually, i think that's a good example of the vast difference between the two margin styles, but not a real example of the 37.50 per contract minimum.
but you get the gist of it.
if you look at some portfolio margin examples from CBOE:
http://www.cboe.com/micro/margin/margin_req_examples.pdf
the fourth line, "Protective Put" with 10 sticks of IBM and 100 puts shows that 37.50 contract minimum margin in play.
the margin is $37,500 versus $498,000 under...
Tuesday, July 24, at 4:00am CDT, we will release version #927. New features include:
Portfolio Margining - Portfolio-based index cross margining to supplement portfolio margined accounts has now been added to the TOS desktop for accounts that qualify.
it could be described as a short, out-of-the-money, diagonized wingspread.
if the front vert goes out worthless, he owns the back vert at a greatly reduced cost, possibly less than free, depending on what he paid/received net for the whole thing.
I got that exact response from one of the "press 4 for account-related questions" people, no one in management.
Waiting for an email response from a higher-up.