is this trade profitable?

[trend2009]

if I short QQQ, I will get more capital in my account. I use that capital to buy treasury bill at interest around 2.3%, as well as some calls to hedge the short QQQ. since the short QQQ+call QQQ option in the long term will be zero minus commissions, if the treasury bill interest is larger than the commission, the strategy will make money in the end. any thing wrong?

 

[Robert Morse]

No, you may not use the credit balance from options or stock to invest in anything, it is not yours to use as it is collateral for the short trade. The short will increase your equity balance but not your liquidating equity, which is yours to use.

 

[tommcginnis]

The ONLY value that matters is net liquidation. Sell whatever you want -- your cash will go up, as will your liabilities: your net liq. ("which is yours to use") won't change in the least.

 

[trend2009]

No, you may not use the credit balance from options or stock to invest in anything, it is not yours to use as it is collateral for the short trade. The short will increase your equity balance but not your liquidating equity, which is yours to use.

but the credit cash is equivalent to treasury bill, no risk at all. why does broker not allow me to use it?

 

[gaussian]

No, you may not use the credit balance from options or stock to invest in anything, it is not yours to use as it is collateral for the short trade. The short will increase your equity balance but not your liquidating equity, which is yours to use.

but the credit cash is equivalent to treasury bill, no risk at all. why does broker not allow me to use it?

This is one of the pesky things about being a retail. Institutions don't have this problem iirc. The options world is a true heads I win tails you lose type scenario for retails in this regard.

 

[murray t turtle]

if I short QQQ, I will get more capital in my account. any thing wrong?

%%
Most likely profitable;
thru SEPT. As far as anything wrong; not right now .KEEP IT simple + skilled. Another big problem with options= they have read the same trading books as most of us+ not liquid...................................................., ..LOL And as far as loaning this gov money LOL; NO, not right now

 

[Robert Morse]

but the credit cash is equivalent to treasury bill, no risk at all. why does broker not allow me to use it?

You short $100,000 worth of QQQ. Stock you do not own. The buyer pays your broker for that stock. Your broker has to go out and borrow the stock to make delivery. That cash is not yours, as you did not deliver the stock. Your broker needs that for collateral. Your clearing broker can use a portion of those funds to do repos, but you can't because it's not yours to invest!

 

[murray t turtle]

You short $100,000 worth of QQQ. Stock you do not own. The buyer pays your broker for that stock. Your broker has to go out and borrow the stock to make delivery. That cash is not yours, as you did not deliver the stock. Your broker needs that for collateral. Your clearing broker can use a portion of those funds to do repos, but you can't because it's not yours to invest!

%% IF he doesnt mind a little bit of decay;
SQQQ can work. Pays a small dividend, better than QQQ, but NOT exactly as liquid as QQQ cash.[About 8 million adv]