Shorting the market with SPY index????

J

JimBob56

Sorry for asking another stupid question:confused:

Would buying a short position in SPY index fund be a could way to hedge your account from any gapping that may occur in after hours trading. The size of the short would be approximate size of your account.

It seem that it only gaps down when there is really bad news. It rarely ever gaps up.

If nothing happens you cover your short and move on.

Besides being out the commissions (me $15 rt) it seems a good way to insure your long positions with one trade.

Is there another way to play both sides of the market on the cheap????
 
Quote from JimBob56:

Sorry for asking another stupid question:confused:

Would buying a short position in SPY index fund be a could way to hedge your account from any gapping that may occur in after hours trading. The size of the short would be approximate size of your account.

It seem that it only gaps down when there is really bad news. It rarely ever gaps up.

If nothing happens you cover your short and move on.

Besides being out the commissions (me $15 rt) it seems a good way to insure your long positions with one trade.

Is there another way to play both sides of the market on the cheap????
More...
If the market goes up you will lose money.

Besides shorting usually requires margin, so you'll be paying a lot in margin interests.

You could watch the index futures vs. fair value; if the difference is too negative, the market will likely open lower. You could sell afterhours to minimize losses.

Better yet, you could be completely off the stock market during days likely to plunge.
 
If you really need to short, you may purchase (go long) on inverse index ETFs, so you don't have to pay margin interest.
 
take a look at these;

TWM (Ultrashort Russell 2000 ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Russell 2000 index.

QID (Ultrashort QQQ ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the NASDAQ 100 index.

SDS (Ultrashort S&P 500 ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P500 index.
 
Quote from nkhoi:

take a look at these;

TWM (Ultrashort Russell 2000 ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the Russell 2000 index.

QID (Ultrashort QQQ ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the NASDAQ 100 index.

SDS (Ultrashort S&P 500 ProShares)
This equity seeks the daily investment results that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P500 index.
More...

I feel silly for asking this, but does most any broker offer these inverse ETFs?
 
nkhoi,

I'm new to this type of trading, so pardon the stupidity.

What happens if I wake up in the morning and find that the S&P tanked 5% and I was currently positioned in in a SDS power share?

Would I be in a short or long position with SDS to cover my current long positions

Thanks for the help.:D
 
You must log in or register to reply here.
Back
Top