Best Way To leverage yourself

Discussion in 'Trading' started by Sky123987, Oct 7, 2008.

  1. I'm buying a house in cash. I also have long term investments :( in stock which have been getting hammered.

    Because my long term investments are worth $hit now, I have to do some borrowing. I want to be $150,000 long in the market. Currently I have 3 DOW future contracts. I only have $21,000 in my account and I need $10,000 in order to maintain the future contracts. I'm scared that I'll have a swing of $11,000 and not be in my contracts.

    Is there a better way to leverage myself. Should I consider purchasing options?
  2. this sounds like a disaster waiting to happen.

    this is the time to be risk-averse. this is not the time to over-lever yourself.
  3. This is not a disaster waiting to happen. I've always been long the mkt, though the ups & the downs.

    In order to get the deal on the house I had to pay cash.

    I'm sure you wouldn't be saying "this is a disaster waiting to happen" if I was still in long stock and took out a mortage on the house.
  4. Yeah, but the difference is that if you default in the house, there still something of value....if you "default" in the know what happens
  5. I'm not aware of what happens if I default in the mkt. I just thought your account goes to 0
  6. you've lost money in your accounts, you feel pressure to earn it back quickly, so you want to enter highly leveraged positions, all in a market that's on a free-fall.... and you think this is not a disaster waiting to happen?

    ok, the best bet for you is to buy a lot of spx options. and while you're at it, trade some es futures. you'll be levered out the ass. that's what you want right?
  7. Kendall


    No, but just realize you only have another 1000points downside with 3 contracts and then you will only be able to hold 2.
  8. I want to be 150,000 long
  9. MAD10


    that will give 150K notional long exposure
    now go to that site and figure out based on
    (1) margin requirements (initial and maintenance)
    (2) min tick and tick value
    (3)your cash positionand market beliefs (upside/downside in points)

    how much you are willing to bet to win or lose
    do your homework... and yes, now may be a time to be risk hungry - opportunities of a generation (but hedge funds will be unwinding redemptions with maturing lockups for a while)
    Good luck!