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I've done a decent amount of research about the mechanics of short selling but I still have a few unanswered questions. In an account with 30% margin requirement and 60k in cash. Purchase 100k notional of stock ABC and post 30k for margin. Short 100k notional of XYZ and post 30k of margin...

TD rep told me there is no stock loan fee on short stock. Is this true? If I short sell 100k of stock XYZ and post the required margin, my daily cost of carry is $0?

With futures you get span by default. It's in equities where you have to post 100K+ to get portfolio margin.

Is there any way to view the exchange guaranteed butterfly ticket at IB? For an example, on IB if I send an order to buy CLZ0/CLF1/CLG1 butterfly does it show up on the exchange traded spread ticket? Or do they just hold the order until it becomes marketable? Thanks

How about in this scenario: Index has a 20% circuit breaker Index is made up of sum of constituents A and B At time T-0 A = 100, B = 200, Index = 300 You sell the same day expiration 235 P for $5 ( Just outside the 20% circuit breaker) At time T-1 A = 70, B = 140, Index = 240 (Index has hit...

I would stay away from market orders when trading options. If you can't get filled at mid try to work the order somewhere between mid and the far side. Give it some time, sometimes a MM actually has to look at your order and fill it. Meaning the algo may not fill it immediately. Yes, MM will...

Yes that is correct, for an energy product like CL there is more volatility near the front.

Depends on your intent.... In either case futures trading revenue will be marked to market at the end of the year. If you are asking from a trading standpoint then yes the volatility between serial months is more comparable on deferred contracts. You will generally find more liquidity on the...

Think about the curve like a diving board. The front of the curve (Where the diver jumps off) moves much more than the back of the diving board. Therefore even though you are notional neutral (short 1 contract, long 1 contract) the short leg (front of the diving board) will move more than the...

Couple cases I can think of where it goes wrong 1. Before expiration, you get exercised on the short strike and the broker liquidates the stock due to insufficient margin. You could experience large pnl from the open option legs. 2. The options expire with underlying between the vertical...

Can you give us some more details on the exact series of events. Did you hold the position to expiration? What broker do you use? After being assigned did you get auto liquidated or did you decide to exit the position? As some others have stated, I'm curious how the option being exercised...

The flash crash was before my time but I've heard some more experienced traders talk about how order books completely vanish in even the most liquid products (Yes including ES, SPX, etc.). If there is no market in the underlying there is no way a market maker is going to give you a two sided...

Is this concept true for skew as well? If you put on a 1x1 25D/15D vertical spread are you closer to weighted skew neutral despite the notional vega difference?

You will likely run into issues trying to get filled on the stop order. When the market really goes bad liquidity dries up and the bid/ask spread can get unexpectedly wide or non existent. You might be better off embedding some sort of a stop loss in your initial strategy, such as a long put...

I have seen many traders use the spread between historical and implied volatility as a factor when entering a trade. Does this spread actually have any predictive power? If so in what context (ex. If historical higher than implied does that phenomenon continue? Does implied usually catch up to...

It's possible to get filled at any price between the bid and ask. It just depends on how desperate the market maker is to transact with your order. In a situation where the market maker has on too much risk and your order helps offset that risk they might be happy to give up a few cents to mid...

Sweep: Imagine you are running an online business selling shoes. If you have 1000 pairs available and you list them all for sale any buyer can purchase them. You might be very quick to increase the price if you see they are in demand and selling quickly. However if one buyer comes in and...

What I'm gathering so far is: 1. Option with 0 extrinsic will have no optionality, so gamma will also be 0. 2. If vol increases and the option gains extrinsic the gamma will increase. 3. If vol continues to increase the profile will flatten and gamma will decrease. Is this correct?

I guess this means TOS is wrong as well? Platform shows: Gamma decreases when Vol increases. AND Gamma deceases when Vol decreases.

It's from the OIC website. If you follow the link below and scroll to the bottom of the page, its the last paragraph. https://www.optionseducation.org/advancedconcepts/gamma I was confused because the image doesn't match the text.