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SpreadProfessor Clients - Thanks !
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I think of spreads on equities (stocks, ETFs) as spreads of last resort. I would always prefer to trade a futures spread because futures are much more capital efficient and more tax efficient than equities. When I trade equities spreads, it's because of the variety of opportunities that I don't always find in the futures market. But I trade equity spreads holding my nose because the margin and tax treatment stinks.
Well, if you are swing trading spreads as I teach my clients, it appears easier for us to find trending and more obvious trade set-ups with the futures spreads than many equity spread combinations. Having said that, I set up the IB account in order to swing trade some equity spread combinations and to track our progress live via our Thursday evening Group Webinars.
One thought I had, and I would welcome your opinion on this, would be to use options. For example, if I was bullish a small basket of A, B, C, and D medical device manufacturer names versus the ETF IHI I might buy ATM calls on A, B, C, and D and sell ATM calls on IHI in lieu of buying or selling shares or buying the short ETF component name.
And I have the 1099 from one equity firm for the consulting fee and the profit-sharing agreement from another equity firm to prove it. A standing NDA prevents me from naming names. If a regulator contacts me about this I would be happy to share it. And both firms, for the record, were competent at following instructions and possessed the wherewithal to stress test their own comprehension of the system before risking capital in live markets.
If I am not mistaken, in an earlier post you claimed to have lost several thousand dollars day trading Nymex Crack Spread futures - which I strictly advised against. And as I recall, you started trading live right away - once again, contrary to my stated advice, and without the benefit of working with me, building out your charting platform, absorbing and understanding the materials and the system, participating in both individual and group webinars, and paper trading the system first to ensure that you understand how to correctly take an entry and establish your profit and stop-loss levels. I have always advised my clients to swing trade longer timeframes with smaller sizing, and to spend several months working with me and the system until their paper trading metrics are established and of sufficient performance before risking live capital.
The options spread you suggest is a vol dispersion spread and I usually see it with OTM options and put on for a small credit. If you're trading spreads based on relative strength (the spread widening), then an option spread is a more capital efficient play than the outrights.
A small improvement in capital efficiency would be a limit order in a DITM,
reasonably liquid (and there is the rub) option on the "primary" leg , and, when filled
a market order on an ETF or equity all in a sinfle order. Straight out of Trader13 playbook.
Seems though that you cant go too far out on the option leg even with the most liquid DITM,
and would have to rinse/repeat if holding a spread for weeks.
My strength lies in finding, backtestiing, characterizing equity/etf spreads so any real world
tips on trading mechanics like this are helpful. Thanks.
reasonably liquid (and there is the rub) option on the "primary" leg , and, when filled
a market order on an ETF or equity all in a sinfle order. Straight out of Trader13 playbook.
Seems though that you cant go too far out on the option leg even with the most liquid DITM,
and would have to rinse/repeat if holding a spread for weeks.
My strength lies in finding, backtestiing, characterizing equity/etf spreads so any real world
tips on trading mechanics like this are helpful. Thanks.
An NDA that pre-dates your contract with stereo70? Pre-2009 and it's still in-force? Bull****.
I think you could certainly make the case that from a relative value standpoint, TSLA is indeed weakening against very high ( > 96 % ) positive statistical 2-year on-the-run correlators like Vanguard Mid-Cap Growth ETF and the Rydex S&P Equal Weight Technology ETF.
The tricky part with respect to constructing spread combinations with TSLA and RYT or VOT at this point in time is my personal discomfort regarding the wide disparity between notional values and 20/40/60 day OTR volatility in terms of devising a workable hedge ratio.
The tricky part with respect to constructing spread combinations with TSLA and RYT or VOT at this point in time is my personal discomfort regarding the wide disparity between notional values and 20/40/60 day OTR volatility in terms of devising a workable hedge ratio.
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I think you could certainly make the case that from a relative value standpoint, TSLA is indeed weakening against very high ( > 96 % ) positive statistical 2-year on-the-run correlators like Vanguard Mid-Cap Growth ETF and the Rydex S&P Equal Weight Technology ETF.
The tricky part with respect to constructing spread combinations with TSLA and RYT or VOT at this point in time is my personal discomfort regarding the wide disparity between notional values and 20/40/60 day OTR volatility in terms of devising a workable hedge ratio.
oh c'mon dude. This is ridiculous. TSLA is a 1.5 beta. >$10K to short TSLA and then another >$15K to buy SPY against beta, overnight. On a spread that moves $300 a day. Now you want to hedge it against a fund? At zero leverage?!
So pay the requirement on long 100 GOOG to trade a $300 ATR. brilliant.
I doubt that you've bot a share of stock in your entire life.