Please tell me the term for......

[learner2007]

yes you did not listen attentively else you would have been in the position to call out his flawed approach.

Here is why:

a) If he enters a long AND short at 16995, and if price breaks out and people cannot get filled at anything below 17050 then his long will be in the money by 55 yen. His stop loss at 17030 would have triggered and he would have lost 35 yen on that trade. So his net pnl would be +20 yen. The exact same pnl as if he had placed a stop buy at 17030 and would by the time price reached 17050 be in the money by +20 yen. What is the difference? Only difference is that in the first scenario he paid commission 3 times (and would have to pay one more commission to close out his long later on), in scenario he paid 1 commission (and would also have to pay one more commission to close out his long later on). So, scenario 1 is inferior to scenario 2.

b) If markets jumped and despite his stop at 17030 he would have gotten filled at 10750 then the pnl profile is again be identical between scenario 1 and 2 except that his pnl would be zero in either scenario.

I still insist you do not understand what your friend is talking about and also do not understand that being long and short at the same time has zero economic benefit, at least none that is pnl related. I am glad this flawed "strategy" is not your cup of tea!

Of course he could place a stop buy. But as he does not know the direction of the move, he would
need to place a stop sell order too, tying up additional margin that could be used elsewhere.
While I personally do not need to use this tactic, it may be sound for some. And I can not agree
with you, being that you keep saying, that it makes no sense. Just given the fact that the brokers
offer this type of order placement means there is a demand for it, and likely in situations other
than the example I gave. And while slightly different in process, the exact same tactic can be
found in option trading, being a straddle. So, even though risky, this tactic is recognized as making
sense for some. True, the person I spoke of is using it mainly due to not being able to compete with
the speed of computer driven orders. But good, bad or whatever, even though it may make no sense to you, this tactic does exist. And commission is not a factor as it's so low here. In fact it's zero at some brokers!

 

[volpunter]

done discussing with you, you want to be stubborn and refuse to "get it" then that is your choice. Btw, a straddle is an entirely different strategy than being long and short an IDENTICAL product. A straddle is not long a call and short the same call. I recommended you already to go back to 101 basics but according to your claim you trade for years, not sure how and in what capacity but obviously not in a professional setting else you would have "let go" of putting up nonsense claims and insisting they are correct. Being long a call and long a put (aka straddle) is entirely different than being long and short stock. Not only are the two entirely unrelated but stocks are linear instruments while options are non-linear in payoff and risk nature. I claim it makes zero sense to ANYBODY except for tax reasons, and if you believe it makes sense for some while you had the chance to think this through then it is you who is stupid not others. Good luck, you will urgently need it.

Of course he could place a stop buy. But as he does not know the direction of the move, he would
need to place a stop sell order too, tying up additional margin that could be used elsewhere.
While I personally do not need to use this tactic, it may be sound for some. And I can not agree
with you, being that you keep saying, that it makes no sense. Just given the fact that the brokers
offer this type of order placement means there is a demand for it, and likely in situations other
than the example I gave. And while slightly different in process, the exact same tactic can be
found in option trading, being a straddle. So, even though risky, this tactic is recognized as making
sense for some. True, the person I spoke of is using it mainly due to not being able to compete with
the speed of computer driven orders. But good, bad or whatever, even though it may make no sense to you, this tactic does exist. And commission is not a factor as it's so low here. In fact it's zero at some brokers!

 

[learner2007]

done discussing with you, you want to be stubborn and refuse to "get it" then that is your choice. Btw, a straddle is an entirely different strategy than being long and short an IDENTICAL product. A straddle is not long a call and short the same call. I recommended you already to go back to 101 basics but according to your claim you trade for years, not sure how and in what capacity but obviously not in a professional setting else you would have "let go" of putting up nonsense claims and insisting they are correct. Being long a call and long a put (aka straddle) is entirely different than being long and short stock. Not only are the two entirely unrelated but stocks are linear instruments while options are non-linear in payoff and risk nature. I claim it makes zero sense to ANYBODY except for tax reasons, and if you believe it makes sense for some while you had the chance to think this through then it is you who is stupid not others. Good luck, you will urgently need it.

Before you call someone stupid, you should learn to listen to what the say. As I said in previous posts,

Thank you. Actually more than a type of order, I was looking for the term for this type of position. While I thought of straddle it really doesn't fit as you would be buying both a put and call rather than buying and selling a put/call.

So you see, I knew that!! And maybe even before you were born if you're under 40. And I never once mentioned stocks, only futures.

So, if a recognized strategy that has existed for decades makes zero sense to you, that's your problem.

 

[volpunter]

Don't change what you wrote!!! You wrote 2 posts above (I cite): "And while slightly different in process, the exact same tactic can be found in option trading, being a straddle." Buying and selling a futures contract (or stock or whatever) is NEVER the same as being long a straddle nor short a straddle. You even introducing the term "straddle" into this discussion reflects pretty poorly on your insight.

You look with every post you put up a little more unknowledgable. I am not the only guy in this thread who told you that you are dead wrong. And if you merely wanted to know about terminology then you would not have written bollocks about straddles, about stops, about a market whose direction you are not certain of, and you would certainly not have written about how being long and short at the same time can be a sensible strategy in certain cases: IT IS NOT!!! There is no "recognized" strategy being long and short an identical instrument. It is left to the dummies to believe it makes the slightest sense. Maybe your ego can't make you shut up but a friendly advice is to just silence down, take the advice you got plus your newfound knowledge of how this stuff is called and get back to your friend and share your knowledge.

Before you call someone stupid, you should learn to listen to what the say. As I said in previous posts,
So you see, I knew that!! And maybe even before you were born if you're under 40. And I never once mentioned stocks, only futures.

So, if a recognized strategy that has existed for decades makes zero sense to you, that's your problem.

 

[learner2007]

Don't change what you wrote!!! You wrote 2 posts above (I cite): "And while slightly different in process, the exact same tactic can be found in option trading, being a straddle." Buying and selling a futures contract (or stock or whatever) is NEVER the same as being long a straddle nor short a straddle. You even introducing the term "straddle" into this discussion reflects pretty poorly on your insight.

You look with every post you put up a little more unknowledgable. I am not the only guy in this thread who told you that you are dead wrong. And if you merely wanted to know about terminology then you would not have written bollocks about straddles, about stops, about a market whose direction you are not certain of, and you would certainly not have written about how being long and short at the same time can be a sensible strategy in certain cases: IT IS NOT!!! There is no "recognized" strategy being long and short an identical instrument. It is left to the dummies to believe it makes the slightest sense. Maybe your ego can't make you shut up but a friendly advice is to just silence down, take the advice you got plus your newfound knowledge of how this stuff is called and get back to your friend and share your knowledge.

As I said, the process, buying a put and buying a call vs buying a futures contract and also selling the same contract, is different, but the strategy is the same. But given the difference in the process, the term straddle would not fit for the futures trade.

You said....how being long and short at the same time can be a sensible strategy in certain cases: IT IS NOT!!! There is no "recognized" strategy being long and short an identical instrument.

Attached you will find an explanation of the margin requirements when buying and selling an identical instrument (4 Nikkei225 contracts) from a broker's site.This should show you that such a strategy in futures does exist.

Now, I imagine you will call the broker stupid for offering this strategy, just as you called me stupid, just because it makes no sense to you, or because you didn't know it exists as a recognized strategy outside of your world. Fine, do so. But you should know that calling someone stupid is not polite.

 

[volpunter]

Even in Japan such is ILLEGAL (http://www.japantimes.co.jp/news/20...ose-is-questioned-on-wash-sales/#.VIWIcDGUc_8)

brokers are not allowed identical product longs and shorts at the same time in the same account. Rules are simple and information on the net is openly available. You are stupid because you still go on rambling about this being a strategy. But I am happy your kind exists, those are usually the low hanging fruits that the market is picking first.

On ignore

As I said, the process, buying a put and buying a call vs buying a futures contract and also selling the same contract, is different, but the strategy is the same. But given the difference in the process, the term straddle would not fit for the futures trade.

You said....how being long and short at the same time can be a sensible strategy in certain cases: IT IS NOT!!! There is no "recognized" strategy being long and short an identical instrument.

Attached you will find an explanation of the margin requirements when buying and selling an identical instrument (4 Nikkei225 contracts) from a broker's site.This should show you that such a strategy in futures does exist.

Now, I imagine you will call the broker stupid for offering this strategy, just as you called me stupid, just because it makes no sense to you, or because you didn't know it exists as a recognized strategy outside of your world. Fine, do so. But you should know that calling someone stupid is not polite.

 

[learner2007]

Even in Japan such is ILLEGAL (http://www.japantimes.co.jp/news/20...ose-is-questioned-on-wash-sales/#.VIWIcDGUc_8)

brokers are not allowed identical product longs and shorts at the same time in the same account. Rules are simple and information on the net is openly available. You are stupid because you still go on rambling about this being a strategy. But I am happy your kind exists, those are usually the low hanging fruits that the market is picking first.

On ignore

That article has nothing to do with this, and the type of futures position in question is not illegal in Japan and has been offered by the brokers here since 1987.

Again you called me stupid. You should go down the hall to your mommy's room and ask her to teach you some manners so that you can get along in the adult world when you grow up.

 

[Swan Noir]

Years ago, when trading equities, I did this on occasion to skirt the uptick rule on a short sale. I would simply sell the long position and end up holding the short side at a time when getting the short off was difficult. Not quite legitimate but it kept my broker off my back.

 

[volpunter]

the FIRST and BEST logical reason for having done so that appears on this thread, ignoring that yes, it was not completely in the "white" zone.

Years ago, when trading equities, I did this on occasion to skirt the uptick rule on a short sale. I would simply sell the long position and end up holding the short side at a time when getting the short off was difficult. Not quite legitimate but it kept my broker off my back.

 

[tandh]

I'm pretty sure there's nothing illegal about it. I've contacted brokers about it and they've told me either use a farther out contract for the second part, or use a second brokerage. This can be done for a lot of reasons. What if your platform is down at one brokerage and you want to get out but you can't? You could simply take the opposite side at your other brokerage to protect your capital. I think it's a smart thing to do.