a prop trader's "lay-up" (tm) (c)

Discussion in 'Trading' started by andrasnm, Sep 5, 2001.

  1. if you have access to some $$$ and a decent rate (like echo)
    I have a "lay-up" for you. (lay-up = sure thing)
    Try to trade bond funds - scalp them half on a short side
    half on the long try to make 2-3 cents. You won't make much
    but won't lose much either. The key is the premium and discount
    of these funds. You must play god and separate the herd. The
    discount/premium is not always right, but some are clearly weaker some are great !!!!
    As I said this is low risk and pretty sure. Even if you fuck up
    and it goes against you for a 1/8 you can wait it out.
    Must have 500k or more available and very low rate.
    We used to make 50k-80k a months and since decimalization we abandoned this but you can make much smaller but better than
    McDonnalds ? The best secret - your overhead is paid from the
    dividents these pay monthly alone!!!

    BTW if you lose it's only money if you make send me my royalty
     
  2. dozu888

    dozu888

    Excuse my slender knowledge of bonds and bond funds, but how do you figure out premium/discount is out of wack ?
     
  3. elie

    elie

    andrasnm

    sounds interesting, where can I find info about- trading bond funds -? any URL ?

    thanx for sharing

    eli
     
  4. ETF's are listed in barrons as discount/premium ,also the yield.
    some a liquid some are so-so. spread now is tight and it trades
    when old ladies make their move. The discount/premium to
    par(asset worth) is just a guide-line. We were trading these
    and the only problem was if you were too long or too short
    when bonds moved big. Hence my neutral strategy. There are
    specialist for all of these (ETF's trade at the NYSE)
    In the good(old days) the spread was teenies or eights :mad:

    Info is sparse no web-site there are some books as it's booring
    as 'cat-shit' - no bigmoves just small profits. I even play these
    just not as a scalp. There are literary hundreds of these so
    if you are patient and the specialist is decent = $
     
  5. dilman57

    dilman57

    if you are long/short in equal size and yld% you will make nothing in dividends.you will collect long side/owe short side.Once again the free lunch disappears.
    The nasdaq site lists etfs but mostly equity funds for foreign exchanges,hong kong-swiss-mexico etc
     
  6. Good point and good eyes.
    you vary your strategy and if you are good and you are right -
    make more. The danger is if you net long 500k and bonds go
    against you. you can have a 70:30 biast on the long side if
    bonds are favored. There is a some default risk as some of these
    ETF are junk or bit above junk rate. I rather eat the dividents
    now as junk seems a bit risky. Many companies you never
    think of are on the brink of the abyss (i.e. lucent)
    I mean risk/reward may not be there anymore.(it's a call
    you make ) Clearly this was kept as a secret before decimalization. Just that we had run into rate and fund problems before - ironically these are not the concern anymore. Had there be no decimalization I would quit my project and head to Echo in a NY minute.
     
  7. elie

    elie

    bottomline = it doesnt work anymore
     
  8. if (IF) you can make consistent 2-3 cents on volume it's can work.
    you will be the hero of the firms as you will "produce" commission.
    I would rather do this where there is a rebate along with 1c or
    less vig. (firm - may not exist ??????)
    My point - you are truly using the prop firm for what it's worth;
    providing capital and structure. For this you need $$$$ not like
    everybody can do it.
    But I understand your scepticism and I don't suggest anyone
    doing it unless you have no other ways of making money in
    the markets.
     
  9. dozu888

    dozu888

    Shoot !

    So you are telling me there is no free lunch ??? I am devastated :D