Is this how trading the Kospi works?...
And is the danger highlighted at the end of the post a reality?
1. Buy to Open K200 using Interactive Brokers,
2. IB will lend you the KRW, which is on based the accounts ability to margin KRW. (note: maximum leverage on KRW/USD is 10%)
The account will now have:
(a) short KRW/USD FX position.
(b) Long K200@KSE SPAN margined position.
3. Interest will be charged on the FX as followed:
4.04% on 1 - 120,000,000
3.54% on 120,000,001 - 1,200,000,000
3.04% on the amount above 1,200,000,001
4. Sell to Close K200. If trade returned profit then now have long KRW/USD FX postion. FX postion earns interest as follows:
1% on 1 - 120,000,000
1.25% on 120,000,001 +
Is this all correct?
I'm concerned that IB's market close price of KRW/USD is c-1.00000000.
I don't have millions of Dollars in my account to margin millions of Won at a 1:1 ration!
...For me it would mean facing a margin call on any possible overnight FX position.
How is it possible to carry KSE trades like this overnight ?
And is the danger highlighted at the end of the post a reality?
1. Buy to Open K200 using Interactive Brokers,
2. IB will lend you the KRW, which is on based the accounts ability to margin KRW. (note: maximum leverage on KRW/USD is 10%)
The account will now have:
(a) short KRW/USD FX position.
(b) Long K200@KSE SPAN margined position.
3. Interest will be charged on the FX as followed:
4.04% on 1 - 120,000,000
3.54% on 120,000,001 - 1,200,000,000
3.04% on the amount above 1,200,000,001
4. Sell to Close K200. If trade returned profit then now have long KRW/USD FX postion. FX postion earns interest as follows:
1% on 1 - 120,000,000
1.25% on 120,000,001 +
Is this all correct?
I'm concerned that IB's market close price of KRW/USD is c-1.00000000.
I don't have millions of Dollars in my account to margin millions of Won at a 1:1 ration!
...For me it would mean facing a margin call on any possible overnight FX position.
How is it possible to carry KSE trades like this overnight ?