Oh yeah duh i actualy looked that up when you posted earlier... Don't mind me i'm learning about dispersion trading haha... And thats why i popped in about your trade.. I'm just thinking a smaller exposure in the stocks that generally go up more and typically are the ones that drag the index higher the most.. Would be better bet? I just wonder with all the etf trading there has to be wasy for a practicioner to exploit the efficenies they create.. Right? I mean isn't the reason ETF's are so popular is because it gives you a way to just sort of by the market in a sense? Not experience the volatility of owning a smaller basket of stocks.. Efficent market crap ya know... Waht about whatas in the ETF that makes it move around the most? Covarience dispersion arbitrage. . Thats just what i'm thinking.. I don't know yet how that would go into a spreadsheet to extract the high vol out of those indexes but i'm sure theres a way to do it..
I don't think dispersion is applicable here. I believe his IWM trade is purely a directional play on the Russell 2000 index (p/l attributed solely to long delta). Besides dispersion trading isn't really suitable for a retail account, as margin reqs, and just the sheer number of positions can grow quite large.
So you have experience with this? I was thinking as well maybe you could buy a basket of self constructed RUT thats all.. Maybe i'm over compmlicating things... or thinking to much..
No practical experience, it's just usually a pro strategy as the number of ULs in the book can get pretty big, but possible for a PA I guess. Atticus would be much more suitable to address this. In fact... http://www.elitetrader.com/vb/showthread.php?s=&threadid=241353
ok i see where you are going, and it is beyond where i want to go. with IWM, it will usually move more than the other indexs and it has good volume and decent bid/ask spreads in the options, so it works for what i am trying to do and keep it simple. i only deal with etfs, and a few stocks.
Yeah so in a way you are doing it.. Cause you could be buying the broader market. . I'lll read that thread doobs.. Is that short for many doobies? Or what... Are you stoned over there?
Haha no, just an old nickname, I don't even recall the genesis of it. But maybe I should be [stoned], it might make me trade better.
Ahh just relax. I tried every drug every way many different times and take it from me the story doesn't end well haha