ok, how about this..... long intc ssf may @ 18.01 short intc ssf april @18.03 i am trying this because every time i purchase /short , my position goes againt me. this way i always win, then when it comes back i win again. i have done 10 such combo's. some positions are still open; but the underlying is not far off at all. comments please!!!!
Ex-dividend date is right in between Apr and May expirations. That might explain... Intel Declares Regular Cash Dividend Tuesday March 25, 6:10 pm ET SANTA CLARA, Calif.--(BUSINESS WIRE)--March 25, 2003--The Intel Corporation board of directors has declared a $0.02 per share quarterly dividend on the company's common stock. The dividend is payable on June 1, 2003 to holders of record of the Common Stock of the Corporation on May 7, 2003. Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at www.intel.com/pressroom.
It all depends on your trading style. Your idea is no more objectionable than people looking for the holy grail in certain Bollinger band settings or MACDs.
It's not a bad approach, it lets you get in right at the open, without having to try to predict which way the market is headed. Of course, when you decide to close out one side, because you think the move is ready to reverse, you pretty much find you have the same account balance that you had when you started, because the side you aren't closing has lost as much value as the one you are taking profit from has gained. So . . . you might do just as well by not trying to play the open, and either waiting until you feel the reversal is approaching, or at least waiting until you feel you can sense the morning's direction, and bet with that direction, then close those positions when you feel the reversal is near. And if when you close those positions, your order is double the amount of positions you're closing, you'll have placed your opposite-side order at that same point.
mag rose got it right. you did not make two cents. F=Cash + Interest - Dividends. When the stock goes ex, it will drop by the amount of the dividend, the future thus factors the dividend. Nevertheless, Looks like you legged in well to get in at roughly fair value but there is no edge in that trade. When interest rates rise, you'll see the forward values increase, you might think you're doing well selling the further out future at a higher price but in the end, you might be just as well off taking the cash and earning interest risk free at the bank.
If you are so undecided about the direction of the underlying stock, what the heck are you doing trading it in any fashion? There isn't a strategy in the world that will consistently make money for you if you don't know what you are trading and why. Well, yes, there is. As was said earlier, put your money in the bank. You'll be better off.
i completely disagree. i actually do have an extensive background in trading. so let me add this by asking these questions.... when going long/short; on occassion, does it go against you?? do you get stopped out, then watch your pos. move in what would be a dollar positive trade? i have been highly sucessful by swinging for pennies. again... i go long and short in different months at the same time. both positions are closed out rather quickly. i believe this is a viable addition to one's trading strategy. don't you think my strategy at least deserves "some" looking at, instead of a one sentence blow-off?
How do you expect to profit from such a strategy? If it is in the 2 cents in the spread, it seems to me that's an awfully tiny profit for tying up the capital and the risk of being in the market. On the other hand, if you are hoping to leg out and have the position reverse for a profit, I don't see any advantage over just taking a position long or short when you feel the time is right. There is still a decision to be made at some point. So sorry, but I don't get it.
I don't quite get it either. There is no logic in your strategy unless you thought you could arb the two months (which you didn't because of the dividend). If you think whenever ("every time") you put a position on, it will go against you, why don't you just do the opposite side rather than 'hedge' your bad entry right away with an offsetting trade? Another problem, from the behavioral finance school: it seems like you look ar each trade/bet individually rather than looking at them as a portfolio of bets, meaning that you are trying to win on every single trade. So really you should look at it as a stock delta neutral position with short 'bond' between Apr and May. Sometimes it'll go against you, sometimes it'll go your way. You're putting on the trade because you think there is a higher chance it will go your way rather against you, otherwise you're not rational putting the trade on at that particular moment. You get stopped out for a reason, and you are free to set the stop or not, but it really wouldn't make sense 'hedging' e.g. a buy stop for your short stock with a long stock position. Why the stop at all then? If you just have both positions on to simply flip them for pennies then that's alright, especially if you are successful. In that case you're just trying to flip in both months. It just seems rather odd to be long and short a stock you're trying to flip at the same time. It's like having two accounts and be long stock in one and short the same stock in the other.