Find a very liquid option series and trade the conversion; long spot, short call and long put at the same-strike. Penny markets will help. You compute carry on the strike price. The implied forward will be reflected in a premium on the synthetic. Much more margin-efficient than the stock-SSF combo. Trade out to Dec07.
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IB no interest on first 10K rule, what do you do with the money?
- Thread starter Daal
- Start date
atticus
Find a very liquid option series and trade the conversion; long spot, short call and long put at the same-strike. Penny markets will help. You compute carry on the strike price. The implied forward will be reflected in a premium on the synthetic. Much more margin-efficient than the stock-SSF combo. Trade out to Dec07.
Thanks for this suggestion - Why do you suggest trading out to Dec07? Do you think this is a better strategy than stock/ssf for someone who just wants to collect some return on 10k of cash that they don't have other ideas for?
ps. How do people get those nice bold quotes that include poster name at the begining of a reply ?
Quote from DiagonalSpread:
Thanks for this suggestion - Why do you suggest trading out to Dec07? Do you think this is a better strategy than stock/ssf for someone who just wants to collect some return on 10k of cash that they don't have other ideas for?
ps. How do people get those nice bold quotes that include poster name at the begining of a reply ?
never mind the ps I just found the quote link{duh}
Trading out to Dec will minimize rollovers. I won't make any calls on tax-efficiency. It's a "better" position that the SSF scenario due to margin-efficiency. Conversions can be bid as a single-unit on IB's combo order function.
Let me know if you need some help and I can walk you through it on a PM.
Let me know if you need some help and I can walk you through it on a PM.
If you just want to earn interest, why not buy Lehman Short Treasury Bond Fund (SHV) for your excess cash. It will give you ~5% interest.
You can find the details here:
http://www.ishares.com/fund_info/detail.jhtml;jsessionid=0QUT13H3CT3LURJUGRDRBGSFGRSMID50?symbol=SHV
You can find the details here:
http://www.ishares.com/fund_info/detail.jhtml;jsessionid=0QUT13H3CT3LURJUGRDRBGSFGRSMID50?symbol=SHV
Quote from trazan:
If you just want to earn interest, why not buy Lehman Short Treasury Bond Fund (SHV) for your excess cash. It will give you ~5% interest.
You can find the details here:
http://www.ishares.com/fund_info/detail.jhtml;jsessionid=0QUT13H3CT3LURJUGRDRBGSFGRSMID50?symbol=SHV
News flash: you are taking risks and can actually lose money in a short term bond fund.
Quote from trazan:
Effective duration is only 0.35 years. Look at the price history.
This product's price history is just 3 months.
2nd news flash: past history is no guarantee of future results. Especially when it is just 3 months of price history.
Nothing wrong with short term bond funds, if you understand that you are taking some risks. Just don't try to pass it off as the same as a nearly riskless money market fund or T-bills or a cash deposit insured against loss by FDIC or SIPC.