Way to achieve highest leverage (without risk of being washed out)

Discussion in 'Trading' started by Newmoney24, Mar 17, 2013.

  1. Hey guys,
    wanted to see the best ways you guys know to get leverage (without the risk of being washed out)

    ideally I'd like 50x leverage but the best I've found is 7x, via the CAC40 7x

    the next best ones are options- options in the money to the point where there's no decay, but these typically don't offer leverage of more than 6-8x before they start factoring in decay into the price of the options.


    and to clarity- I don't want to buy futures, or do forex outright (as these positions you can get washed out of, which is exactly what I want to avoid)(I dont want a margin call or forced liquidation-- I want to keep my position regardless of how hard it gets hit)

    ----

    looking forward to your responses
     

  2. This does not exist. I know what you are thinking, but leverage is essentially credit and needs to be payed for one way or another. The leveraged ETFs have built in decay and do degrade over time. They are meant for trading, not for long-term holding.

    Leverage without time decay via options needs to be borrowed (which includes interest like with a regular credit transaction)
     
  3. thanks for your input

    however, it does exist
    ill give you an example:


    search the option chain for XOM
    it's current price is: 89.37

    if you buy deep enough in the money, you get leverage w/out decay:
    for example, it's april13 call at strike price 77.5 has a bid/ask of 11.85-11.95

    you'll find that you're purchasing w/out decay or extremely small decay and getting leverage of typically ~6x (in this case it's about 7-8x but again the deeper you go, the less decay)

    I'm looking for something like this but rather than 6x decay I want as high as possible, is this the best there is? experienced leverage traders don't hesitate to jump in
     
  4. The option expires this month, so.... yeah. ;)
     
  5. it's a month out, that doesn't matter though because you can sell and rebut the next month out at expiration
     
  6. short dated OTM options on futures
     
  7. to the op you say "there's no decay" - wrong. there is always decay (by def otherwise arb would immediatley come in) it's just that w/ ditm options the effect is so small you hardly notice it.

    you say you want higher leverage but as others as said correctly you pay for it one way or the other. for ex, if you buy otm puts/calls you're "paying" for it b/c the delta is so low and the chance of price being there at expiry is so low.

    bottom line, there is no free lunch here. either take more risk and know that's what you're doing and try to hedge somehow (or only use a small portion of your capital to begin w/ doing this) or just be content w/ smaller returns.
     
  8. credit card cash advance

    funds personal loan deposit

    funds futures margin

    for futures punt

    with stop loss order

    ...

    mind the gap
     
  9. You can buy a house with a FHA loan requiring only 3.5% downpayment. That's only $17,500 for a $500,000 house. You'll get over 28x leverage. You'll have mortgage payments, but as long as you pay them you will not "wash out" and can keep your position no matter how hard it gets hit.

    Sit on it long enough and you will most likely make hundreds of thousands of dollars in price appreciation from your original 3.5% position.

    You are welcome. Good Luck.


     
  10. Safe as houses.
     
    #10     Mar 17, 2013