Interactive Brokers Hedging

No @Zzzz1, we just don't understand ;)

It's simple see... 1+1=2, so then 1-1 is also 2 and therefore, the hedge works in two ways. So you can't lose money, because it's hedged see... but you can win money, since you make money on the long... OR the short... so 3x a win = billionaires....

EDIT... shit... I just gave away my brilliant strategy!!!! Well, back to the drawing board than :D
 
It might be a feasible strategy if you are long the stock and then want to take a long and short position on an option in order to cover potential losses in the underlying. IF for some reason you want to hold the stock (can't liquidate due to legal/tax reasons)?

Not profitable, but it protects your held interest.
 
That is also nonsense. You can trade a long call and put but that would result in a straddle/strangle and would be an entirely different payoff profile.

Anyone who claims a long and short position simultaneously on the trading book in the exact same instrument makes any economic sense is totally deluded. The payoff profile will always be zero over the netted out notional amount. I would love to use a harsher language but I try hard to hold on to myself because it's not my money lost but the one of a slightly incapacitated human being.

HappyTrader said:
It might be a feasible strategy if you are long the stock and then want to take a long and short position on an option in order to cover potential losses in the underlying. IF for some reason you want to hold the stock (can't liquidate due to legal/tax reasons)?

Not profitable, but it protects your held interest.
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No, I think @HappyTrader talks about having a conversion on... long stock, short synthetic in options.

I get that, if that would help with pushing capital gains tax further out. But OP's and lots of others posts make 1-1=0 sense
 
To protect a long stock with an option only requires a long put. A limited upside with collecting additional premium requires only a short call. But not a long and short call or long and short put of same strike and same expiration.

JackRab said:
No, I think @HappyTrader talks about having a conversion on... long stock, short synthetic in options.

I get that, if that would help with pushing capital gains tax further out. But OP's and lots of others posts make 1-1=0 sense
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Zzzz1 said:
To protect a long stock with an option only requires a long put. A limited upside with collecting additional premium requires only a short call. But not a long and short call or long and short put of same strike and same expiration.
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Yeah I know, but it could be that you want to fully exit the long, but don't want to pay the capital gains yet in this financial year... and therefore trade the synthetic short against it. So short call and long put in same strike.

So you're flat, but haven't officially realized the gain yet tax wise. i think @HappyTrader is pointing to that....
 
JackRab said:
Yeah I know, but it could be that you want to fully exit the long, but don't want to pay the capital gains yet in this financial year... and therefore trade the synthetic short against it. So short call and long put in same strike
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IRS specifically looks for this and if you're not careful you can reset your holding period.
 
You need an specific "edge"
Having both positions on will not be an edge,it is just that two positions.What profit or loss you will incur will be random and perhaps you run a good "streak" and will close trades at the profit.It is just coincidence.

I made the comment,because I build mechanical strategies which don't use technical indicators.Browse through my past posts and i put 2 of them up.
I do calculations based on sets of open,close,high,low(can not be specific here) and the amount to bet I use methodical betting calculations based on past trades.
My edge is there somewhere.

I repeat what has been said already,you will be paying more to the broker and if it works for you,because you closed at the profit that is nice.Just don't mistake that for an edge.
 
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wintergasp said:
Man that's utter bullshit, it's the same as just pretending you're long and short in your head and when you see the market go up you pretend you close your imaginary short and actually go long, you've just saved double commission as @lovethetrade mentioned
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Yes Qwerty. Buying and Selling the same pair, at the exact same time will always = Zero profits. But at least you wont lost anything, right? :)
 
Qw3rty said:
Hi,

I would like to try out a particular strategy that involves buying and selling the same currency pair i.e. Going long and short on the EURUSD at the same time.

I know that IB does not allow this due to the FIFO rules on a single account. Would creating a new account and linking the account work?

Alternatively if the above does not work could I trade under a secondary created user?

How would the cash management work to be able to trade from with of the above?

Cheers
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Hello Qw3rty, yes it's totally doable and can be consistently profitable. It will mostly come down to entrance timing and pairs being watched. Not necessarily long eur/usd and short eur/usd at the same time.
 
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