Cost Of Carry

cakulev · Nov 28, 2005

Quote from gkishot:

It does make sense to hold index futures long term because of their leverage. If let's say their leverage is 1:10 & given that historical average growth of s&p500 is 10% anually then the expected capital growth with futures would be 100% - 4% = 96% annually.

Sure, when market drop 10%, you are wiped out. Not cool.

Oh and BTW the return would not be 96% but 60% (10*(10-4)).

gkishot · Nov 28, 2005

Quote from cakulev:

Sure, when market drop 10%, you are wiped out. Not cool.

Oh and BTW the return would not be 96% but 60% (10*(10-4)).

That's where you should gradually pump in your cash reserve that you keep in any other assets. No the return should be 96%.

cakulev · Nov 28, 2005

Quote from gkishot:

That's where you should gradually pump in your cash reserve that you keep in any other assets.

Tell that to my wife.