Using a GSL for a 100k short position ?

[wackypete2]

As pboyles said, there is no spreadbetting allowed here in the US, but there is also NO charge for unleveraged overnight positions. Hold as long as you want.

Peter

 

[leonarda]

leonarda it's basically like house insurance. it's not a value trade - which is why insurance companies make money (over-simplified i know, but you get the gist). so from a value point of view, it's a no. from a sleep easy point of view - only you know the value of your sleep!

thanks.

also, I think such a short squeeze can't occur out-of-hours, as obviously you have to have active trading to cause the squeeze... which in case means your standard stop would take you out with a few minutes, in which case you may suffer say 50% or so...

so i'm thinking no to GSLs as well.

 

[shortsell]

You are rather touchy about this criticism, can I ask if you are by any chance involved with a spreadbetting company?

i have worked in the industry, and have been (and still am) a client of the industry - so i know it well from both sides of the fence and understand the product - particularly equities.

i trade stocks PA on an SB account and have historically been employed looking after an SB company's top equity dealing clients, so from a knowledge standpoint i'm in a good position to expose your ignorance.

that said, i won't be discussing specifics of any spread betting firm at all and have no financial interest in doing so.

 

[shortsell]

As pboyles said, there is no spreadbetting allowed here in the US, but there is also NO charge for unleveraged overnight positions. Hold as long as you want.

Peter

of course not - why would you pay funding on an unleveraged position?

it's different if you have a position 100% cash-covered in a leveraged trading account though as at any time you could use that cash for other trades - so the default is that you pay funding on the entirity of your positions. i agree it's a pain, but it is the norm here.

 

[shortsell]

thanks.

also, I think such a short squeeze can't occur out-of-hours, as obviously you have to have active trading to cause the squeeze... which in case means your standard stop would take you out with a few minutes, in which case you may suffer say 50% or so...

so i'm thinking no to GSLs as well.

as long as you don't misconstrue what i said as advice to this end. it is a personal choice and if you feel more comfortable with a g stop in place then that's great.

the squeeze itself can't take place out of hours but the opening price of a stock can be significantly different to the previous closing price, so if you are thinking 'i'll have a chance to get out as long as i'm quick' you need to review how opening prices are determined on the exchanges you play on.

 

[leonarda]

as long as you don't misconstrue what i said as advice to this end. it is a personal choice and if you feel more comfortable with a g stop in place then that's great.

the squeeze itself can't take place out of hours but the opening price of a stock can be significantly different to the previous closing price, so if you are thinking 'i'll have a chance to get out as long as i'm quick' you need to review how opening prices are determined on the exchanges you play on.

yes of course
i'm quite happy(!) with the chance of say a 50% GAP due to a bid or something, and i'm not going to short a biotech or oil exploration company,
so i've talked myself into justifying what might be my hypothetical position...!

 

[wackypete2]

pete, typically most charge 2.5% over 1 month libor. obviously guys position trading size aren't going to be on 2.5% - in my experience 1.5-2% is closer to the norm.

pboyles, any thoughts on how this compares to leverage costs with a DMA broker?

Comparing this to TDAmeritrade, $100,000 position with 50% margin ( US accounts ): 7.25% annualized on $50,000

= about $10.01 per day

Peter

 

[shortsell]

that seems like a pretty extreme example! is that typical?!

 

[wackypete2]

that seems like a pretty extreme example! is that typical?!

Most brokerages are in the same ballpark. Of course, even though it's a leveraged account, If there is cash on deposit > than the $100,000 position, then no charge. If I am reading you correct in this situation a sb UK firm would still charge?

Peter

 

[wackypete2]

anyway...this is a bit off topic. My apologies to the OP.

Peter

 

[shortsell]

right - so i suppose in real terms the contrast isn't as stark as it appears.

so it's like an overdraft facility on US leveraged stock accounts really. sounds fair - although 7.25% with rates where they are now is outrageous really.

thanks for the info peter.

i wonder if pboyles has any comment to make on these comparisons?

 

[shortsell]

i've just realised i've been picking exclusively on pboyles when d toast is equally deserving of some ridicule. apologies to both.

 

[wackypete2]

i've just realised i've been picking exclusively on pboyles when d toast is equally deserving of some ridicule. apologies to both.

Both of them are well regarded on here even by those who have opposite opinions. Ridicule isn't necessary.

Peter

 

[shortsell]

obviously my use of the word 'ridicule' was tongue in cheek, but regardless it's extremely narrow minded (and completely wrong) of both of them to describe anyone who uses the spread betting product as lacking wit, or 'dumb'.

their failure to understand the product or its potential applications is their own shortcoming - not a failure of those who do.