Most suitable instrument to use in my situation - Trading indexes

Discussion in 'Trading' started by tradertt, Jan 14, 2008.

  1. Hi Guys,

    I am facing a problem here.

    I actually would like to trade indexes but I want to hold for the long term.

    I know I can use ETFs as an option but they do not provide me with much leverage.

    I am currently purchasing Call options as they give me leverage but their expiry date is always 3 months to 6 months and the time decay is very high.

    Considering Futures but wonder what happens after the futures expires? Does it roll over to a new future contract?
    Is there time decay in futures?

    Are there any other instruments I can consider using too?

    Thank you
  2. Most obvious choice would be the two-times ETFs, like Pro funds QLD or SSO. I think you can buy them on margin, so you could get four times leverage, although I would not advise that.
  3. Ultra Short Pro Shares ?

  4. You can use leveraged (2X) ETFs.

    Futures often (but not always) have a slight "time decay" about 5% per year, search Contango and Backwardation.

    When futures expire, they are settled into cash. You have to roll them manually, is isn't a big deal.

    You may consider selling ETF LEAP put options.
  5. spinn


    Why not sell options to open....the time decay will work in your favor.
  6. Hi guys, as I am from Singapore. Where can I get most of the instruments mentioned? Interactive brokers? Possible?

    Futures, if the time decay cost of 5% pa thhat may be equal to my cost of margin interest too