Sorry IB, your customer service is a joke

I've just never had a problem with IB customer service, no problem connecting with chat, no rude people, no unanswered technical problems, zip, nada, can't complain. I have occasioned enormously stupid things that I did on my end, I trade manually with them and I use the API via third party dll's and write my own Tradestation scripts, I have lots and lots of opportunities to do enormously stupid things. They answer my enormously stupid questions and they get off the line pretty much......

They made a decision a long time ago to be technically advanced. They do not do the "backward compatibility" thing at all. Kudos to them, try working your way through backward compatible bloatware sometime, I found problems in one trading platform that have been there since 1999-2000 probably because they are afraid to break somebody's code.

They just don't seem to waste much time with people that have a personal problem, or a problem that maybe is not on their end of things, etc. I recall one thread on ET where the guy was complaining to IB and then here on the forums and IB cancelled his account and returned his money :) I felt better about doing business with IB at that point, they aren't wasting their time placating the loudest complainers.
 
It's always best to use atm strikes for conversions due to liquidity. There is an 15 cent swap between the Dec 48 and 60 conversion on QQQQ. This is a function of [lacking] deep itm put liquidity and the financing swap.

Stick to the atm options, no need for a scanner. All the liquidity is there. The atm conversion yields:

Spot: $47.54 close
Forward based on 5-months at 5.38% 6mo LIBOR; $48.61; premium, $1.07
Dec 48C: 2.77
Dec 48P: 2.16
C/P: .61
Strike/spot: .46
Conversion capture: $1.07

Voila. 5.38%
 
Quote from atticus:

It's always best to use atm strikes for conversions due to liquidity. There is an 15 cent swap between the Dec 48 and 60 conversion on QQQQ. This is a function of [lacking] deep itm put liquidity and the financing swap.

Stick to the atm options, no need for a scanner. All the liquidity is there. The atm conversion yields:

Spot: $47.54 close
Forward based on 5-months at 5.38% 6mo LIBOR; $48.61; premium, $1.07
Dec 48C: 2.77
Dec 48P: 2.16
C/P: .61
Strike/spot: .46
Conversion capture: $1.07

Voila. 5.38%
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What about dividend? And can you really execute the call and the put at that exact price?
 
I didn't look up the Q^4 dividend, nor is that the point. The dividend is embedded in the synthetic, and it captured by owning the spot. Let's not nit-pick the sh!t out of it for a few basis under LIBOR. It's also a lot more liquid than the "by appointment" trading in SSFs.

It's simply a hypothetical example using closing quotes. Yes, I can trade at fairval on QQQQ options all day long.
 
appointment trading ??

LOLOL It isnt that bad man. There is a ton of liquidity at a 20bps edge. I'd venture a guess that the conversion will cost more than 20bps to fill w/o taking delta risk??


OP -> have you tried placing the order through the spread trader, it's how i always do it.
 
Quote from rallymode:

appointment trading ??

LOLOL It isnt that bad man. There is a ton of liquidity at a 20bps edge. I'd venture a guess that the conversion will cost more than 20bps to fill w/o taking delta risk??
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20 basis edge loss? That's nuts. You should be trading conversions/reversals.

To fill it on spread trader? Yeah, probably to go to the market. Let me know when you're looking to trade the conversion at market.

It's not difficult to trade the 3-way at fair-value, and when trading size. I've traded SSFs, and the market is often wider than the liquid conversions. It's one trade to the end of the year. Trade during the lunch break on a quiet day. The spot/SSF requires a larger haircut and is inferior in yield.
 
Quote from atticus:

20 basis edge loss? That's nuts. You should be trading conversions/reversals.

To fill it on spread trader? Yeah, probably to go to the market. Let me know when you're looking to trade the conversion at market.

It's not difficult to trade the 3-way at fair-value, and when trading size. I've traded SSFs, and the market is often wider than the liquid conversions. It's one trade to the end of the year. Trade during the lunch break on a quiet day. The spot/SSF requires a larger haircut and is inferior in yield.
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Bro, we will talk it over in chat but i am nearly certain the yield isnt inferior.

Last i checked GOOG convs carried 50bps in edge at 5% yield.(IB mid market). I sold a bunch of DNA EFPs at 5.8% yield the other day at the bid too.

I agree on the roll savings though. EFP yield goes down as you go out in time but at 50 cents per lot it costs a little over nothing to roll it. Haircut is like less than 1% under PM so not really an issue. I am all for it if i can find a good yield on convs, i remember last year GOOG had 6 to 7% yield on some back month convs. But it seems every time i look at these i cant find anything better than 4-5% range on any of the liquid high fliers.
 
For the EFP thing, I have noticed you seem to get the highest yield when the stock tank. Is it the case? Do you get the best yield when the stock suddenly drop a big percentage?At least from what i see from DNA and SOV.

The dividend does matter when u are doing a reversal/conversion, does it? The price that you quoted on the 2 leg of options has already included the dividend. For the long stock leg, you get to keep on the dividend until the options expired. Doesnt the total return becomes the number you suggested plus the dividend? Correct me if i am wrong on this because this is my first time arbing the spot and futures/options market for interest.
 
No, the dividend doesn't matter as it's reflected in a premium/discount on the put/call. IOW, it's priced as a discount on the synthetic to the forward. Synthetic = forward if [div = 0]. Spot + carry[fwd] - divie = synthetic. The discount is recovered by owning the spot. If you were correct, you'd receive a [nearly] risk-free arb on the dividend.

The only risk to the position is pinning; a dividend surprise; and/or a material change in the risk-free rate.
 
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