If you sell (buy) an EFP, you buy (sell) stock and sell (buy) an SSF. EFP means that you do both at the same time, as part of the same "combination order", and that you and your counter-party simultaneously agree on one price to cover both legs of the transaction at the same time. You do this because it is far less expensive and far less risky than trying to execute the two legs separately.
IB no interest on first 10K rule, what do you do with the money?
- Thread starter Daal
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If you sell (buy) an EFP, you buy (sell) stock and sell (buy) an SSF. EFP means that you do both at the same time, as part of the same "combination order", and that you and your counter-party simultaneously agree on one price to cover both legs of the transaction at the same time. You do this because it is far less expensive and far less risky than trying to execute the two legs separately.
It shows as two separate positions, one a stock position, and the other an SSF position.
Heres one I havent seen mentioned.
You can create your own combo with the stock and future, which seems to offer better pricing, as the stock moves.
Question is , what are the commission and margin implications. I was told that EFP margin should apply, not sure about commission. A combo line created in this way is not displaying 'check margin' for some reason.
You can create your own combo with the stock and future, which seems to offer better pricing, as the stock moves.
Question is , what are the commission and margin implications. I was told that EFP margin should apply, not sure about commission. A combo line created in this way is not displaying 'check margin' for some reason.
I haven't looked at AAPL, and the market is closed right now so I can't check it; but in general, the spreads on IB's EFPs are razor thin. They are only tiny fractions of what you would pay by legging into the future and stock positions separately. I think that if you look again, you will see that you have your facts incorrect. I'll take a look at AAPL tomorrow.
Wow, I checked the EFP spreads for AAPL, and for the December expiration, you are correct; but for September on in, the EFP spreads are only a small fraction of what you would pay by legging into the stock and SSF legs separately.
Some EFP spreads, for some symbols, are razor thin, amounting to only a few hundredths of a penny per share, while others on high-priced stocks with far-out expirations, such as AAPL in December, are comparable to the large spreads in the SSF market.
Just because the highest priced stocks, with longest-dated expirations, do not provide good EFP spreads, doesn't mean we should focus on them. The opportunity to benefit comes from shorter expiration EFPs, where IB narrows the spreads to a small fraction of what they are in the SSF market. This is where our transaction costs will be so small, and often negligible, so that we can enjoy the benefits of interest rates better than any broker will pay, and we can get them on our entire account equity, including the first 10K, and including proceeds form short sales.
Some EFP spreads, for some symbols, are razor thin, amounting to only a few hundredths of a penny per share, while others on high-priced stocks with far-out expirations, such as AAPL in December, are comparable to the large spreads in the SSF market.
Just because the highest priced stocks, with longest-dated expirations, do not provide good EFP spreads, doesn't mean we should focus on them. The opportunity to benefit comes from shorter expiration EFPs, where IB narrows the spreads to a small fraction of what they are in the SSF market. This is where our transaction costs will be so small, and often negligible, so that we can enjoy the benefits of interest rates better than any broker will pay, and we can get them on our entire account equity, including the first 10K, and including proceeds form short sales.