how do YOU use margin?

Discussion in 'Trading' started by Gordon Gekko, Aug 20, 2002.

  1. that isn't what i meant, but thanks for the response.
    #31     Sep 9, 2002
  2. I use it to write little notes on when I read something interesting..
    #32     Sep 9, 2002
  3. u130747


    I take my total amount of funds and divide by the five stocks I trade. I alway round up. Say for example I have an 80000 position and the stock price is 46.82. It would say to buy or sell 1708 shares. I round up to 1800.

    Bert:D :D :D
    #33     Sep 9, 2002
  4. I was re-reading a few of the older posts on this thread where someone said that the only instance where you would most likely experience a catastophic price shock(while simultaneouly overleveraged) would have occurred on the downside...

    But the problem is that since about 1998, I would argue that the majority of price shocks have occurred on the upside...There were at least two significant upside price shocks in 2001 alone...The price shock which occurred in 1998 was extremely swift and occurred one day before an options expiration, thus ensuring that all the gamma players were extremely exposed...

    The interesting aspect of these multiple price shocks is that the skew still does not reflect this risk on the upside...Whereas following the 1987 stock market crash, all index options traded at a perpetual skew with a graduating scale of higher and higher IV's the further OTM...I have not seen the same affect in the call side...So one could argue that the majority of short term players(ie futures scalpers, index options traders, market makers, etc,etc) have much greater exposure to upside catastrophes predicated on the fact that there is less margin for error when making big bets against the upside and then having the shock go the unexpected way...
    #34     Sep 9, 2002