This is a bad idea for more than one reason:
1) the spreads on SSF's are terrible. You are automatically paying the spread (often .10 or more on SSF's even on liquid stocks) and are down say, $100 on 1000 shares. With a bullet, your only cost is the per share cost, so in this case it would be about $10.
2) This is horribly margin inneficient. In order to keep this position on for the day, you would have to have margin on both the SSF and the equity. Even with a $50K account and say a $50 stock, this would be close to all you could trade if you wanted to trade 1000 shares. With a bullet, you need to put up like 1/10 or 1/20 (I forget exactly) the required margin to actually hold both positions [DIM put option and long stock.]
3) because of 1 and 2 above, you would pretty much have to "pick" your stock for the whole day and be stuck with it. With real bullets, you could just grab one as you need it (important if you trade news) and whack away.
4) [maybe] it is slower to execute to positions as a leg than a bullet as a spread. When I used the PointDirex system [now Xoom], I had a bullet in less than 1 second.
There is no question that IB needs to supply margin efficient, fast electronic bullets to stay ahead of the competition.
nitro
Quote from saschabr:
At the beginning of the trading day,
you buy your stock in the quantity you will trade at maximum
and short the SSF.
Then you can sell your long position at a downtick whenever
you want.
This is good if you trade this position 2-3 times or more often.
j/k