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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: flatsville who wrote (37612)	1/18/2000 7:19:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

Flatsville, yes I meant funny/weird. As to leverage, retail investors can leverage bonds 1 to 10, as I do. In my case I am buying bond strips instead of MM Funds which now pays me over 7% on a yearly basis and also protects me from a crash - e.g. in a crash those strips go up substantialy. As I can leverage 1 to 10, the remaining 90% I am using for trading stocks which I can leverage 1 to 2 or write naked option (my prefered trade) which I leverage 1 to 5. Example with $100,000 cash I buy $100,000 in treasury strips which gives me power to buy $180,000 in stocks or write stock options for stocks valued at $900,000. Now that nobody should go GAGA - as an example on CSCO who trades at $111 I can buy or sell short 1600 shares or write 18 110 Feb call option and 18 110 Feb put option for a credit of $8.5 and $6 or a total credit of 18x14.5x100=$26,000. If CSCO will be 110 by Feb expiry I poket $26,000 and $700 (7/12 percent) in interest. Second scenario is that are spreads buy/ sell strips or bonds and lock the spread. As a retail investor with $100,000 you can play $1,000,000 in strips or bonds and there is the killer. You can lose very quicly lots of money. See Trading Ideas on the Chicken page members.bellatlantic.net members.bellatlantic.net Profesionals can leverage not 1 to 10 but 1 to 50 or even 1 to 100. I have known a hedge fund who went out of business in 1994 for such trades, as a move of a tick translated in over $60 million profit or loss. In that case one point on the long bond, which is 32 ticks are a mere $1,9 billion. Quite easy to lose a bundle. (the fund had over $3 billion in assets) LTCM was palying the same play before being bailed out. I hope it helps. THOSE TRADING STRATEGIES ARE HIGHLY VOLATILE AND ARE NOT RECOMENDED!!! BWDIK Haim