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craigatelite, Thanks for a very clear answer and for the zionsbank link. I tend to buy bonds with short term maturities because interest rates seem more likely to go up than down. Also, I am worried that selling in the secondary market may have some gotcha's especially for less liquid...

I am looking at some Federal Farm Credit Bank notes which pay about 4.7% for a 1 year maturity. I think that these are agency notes and I am told that they are state tax free. 1) How can I confirm they are state tax free? 2) Any gotchas associated with this type of note? Don

Good info, although actually I Bonds have a 60k limit per individual. That is, you can buy 30k paper and another 30k online. I don't think that TIPS have a fluctuating principle perhaps you mean they have a fluctuating inflation component. If you buy them at auction you cannot lose...

"If you definitely want TIPS, the easiest and most diversified way to go is simply purchasing i-shares TIPS ETF." I view these I shares the same as a TIPS bond fund. That is there is interest rate direction risk. Buying short term TIPS in the secondary market eliminates this risk. "Very...

Yes, that might be good advice, but if you buy short term bonds and hold them to maturity you cannot lose money. Longer term bonds don't have much better yield anyway. Don

I Bonds are a great investment, but I think that TIPS are better yet. TIPS and I bonds have very similar interest paying mechanisms. That is, both have a fixed interest component and inflation compensation component. Both inflation compensation components are tied to the CPI therefore their...

Thanks, fader and craigatelite, your explanations Make sense. On a related issue, does anyone have experience trading TIPS in the secondary market? Any suggestions? As I mentioned earlier, I think the TIPS have paid in the neighborhood of 7% in recent periods including the inflation...

You might be right about it not being likely to outperform bond funds. I was just trying to give you some feedback on your post. Let me know if you have any input on my original question. Don

At a glance I don't see any particular advantage to selling calls on TLT. Basically, the 5% dividend will cheapen the calls so the net benefit should be zero. Of course, if you think you know where interest rates are headed maybe you can make some good directional plays on TLT. It's been a...

Closed-end bond funds have their own risks and I am not comfortable of my associated knowledge although I suspect your are correct saying they can be good investments. In general Bond funds, as opposed to individual bonds, have the disadvantage that you cannot hold them to maturity and be...

I am an active options trader that likes to invest a portion of my portfolio in safe marginable investments. Recently I have been dabbling in bonds and have been disappointed in the apparent lack of practical information on this subject. Sure there are lot's of tutorials on the basics, but...

Of course it is "our job" to protect our money. and to be aware that busting is a risk. But it's also part of our job to minimize these risks and opposing the current unfair busting policy is consistent with that philosophy. Anyway I am not saying that busts should not be allowed, I'm saying...

I don't see anything wrong or illegal about your idea, but there are obviously some practical drawbacks that you mentioned. Another approach might be to go long the stock in your Roth IRA and create a synthetic short position (long put, short call) in your regular IRA. You might have to buy...

How come you don't have the same attitude toward the broker side? You seem to say that they should be able to avoid the risks, but the retail trader should not have the same privledge. I think we can agree to disagree on this one. Don

If the busted trade was re-filled at the original fair price plus a small penalty to the busting party, I would agree with you. I have had a couple of options trades busted and there is no way to know that they were away from the market. Percentage wise option prices can jump pretty...

I don't think you would be thanking IB if the trade executed at a favorable price. Furthermore, if you had a corresponding hedging transaction and the trade was busted your hedge would then be naked. Again, you'd likely be cursing IB instead of praising them. Busting trades is an...

Nobody replied so for what it's worth I'll give you an off the top guess: Most of the Greeks are defined "for small changes in the underlying". So you may have been gamma neutral initially, but unfortunately the underlying had a pretty big swing and Gamma became unbalanced along the way...

I am not sure about the other IB greeks, but the IV calculation always looked wacky to me. For example, the QQQQ Nov $40 Call today shows about .85% when the correct figure is about 12.5%. Can anybody shed some light?

Excellent way to prove the dividend effect on Call prices. To make it clearer I have re-arranged your equation to reflect Call options (the subject of this discussion): Call = +stock-Strike +Put -dividend +interest_on_strike So it's clear that Calls are made cheaper because of the...

I don't think that is true. Dividends always make a call cheaper even when the call is in the money. Of course, American style calls will not get any cheaper than parity. Here is the link posted by Def earlier. It makes no reference to ITM or OTM it just says that dividends make a call...