Yes, wayneL, Skyquake is right. AAPL could have easily spiked downwards, although most people could see that it was in an upward trend. Had AAPL crashed though, I had (and still have) a GSL in place. I would not have made a profit, but would have broken even.
As AAPL is generally contrapuntal to the SPY, a contingent buy order on the SPY provided protection. Less than 24 hours later AAPL gapped up, the calls were sold, the buy order on the SPY was cancelled, and the GSL was placed.
Since the GSL was not triggered last week, it is still in place for this week's trade.
As AAPL is generally contrapuntal to the SPY, a contingent buy order on the SPY provided protection. Less than 24 hours later AAPL gapped up, the calls were sold, the buy order on the SPY was cancelled, and the GSL was placed.
Hahah he has no clue about hedging, dont bother he won't understand.
No proffessionals trade CFDs as main instrument (yes some trade them for fun). There's a reason only Kertcher/Mcintyre type of people sell this systems to the mums & dads.
I am nothing but a bloody amateur who happens to make a lot of money trading.
Over the last three months AAPL was contrapuntal to the SPY 90 % of the time and last Wednesday was no exception. When AAPL gapped up so beautifully, the SPY went down. That is the reason why my contingent buy order on SPY was not triggered.
minwa, you are not very professional the way you spell professional. In any case, I never claimed to be a professional trader, I am nothing but a bloody amateur who happens to make a lot of money trading.
Anyway, I have told you about my trade this week, let's just wait until Saturday to see how it turns out.
Over the last three months AAPL was contrapuntal to the SPY 90 % of the time
I have banned Alvin Purple for 7 days or until he shows an audited statement of his claims of profits...
You could have left his post from 10.38pm (dated 29/7) instead of deleting it so others can judge the validity of his claim if/when he shows his statement. Please re-instate it in the name of democracy and fair play.
"Alvin Purple" aside, I like many other people following this thread have never traded a CFD, so some of the references to how this system works are a little unclear...
From what I can gather here, CFD's are used to buy the stock and a "guaranteed stop loss" is put in place at break even. Calls are then written against the stock and I'm guessing, dividends could possibly be collected too...
Is that correct?
If so, then where does the risk of loss come in to play?
Could someone please explain how this does (or doesn't) work and where the risk of loss is?
I'm having trouble understanding where the risk is and it's probably because I don't understand the mechanics of the CFD GSL.
Thanks in advance.
The guarantee stop loss order is just any other stop loss, except the price is guaranteed even in case of massive gaps. However for the privilege, you pay 0.3% prem, and the stop must be set no less than 5% away from the last price.
So 10bp to buy, 10bp to sell, and 30bp prem = 0.5% total spent
On apple thats about $2.50 which will eat heavily into the option prem.
In short, no free lunch.
Thank you skyQuake,
So the risk is 5% (multiplied by whatever the leverage is that's being used) plus 0.5% for the costs involved, minus the premium....?
Wouldn't selling a put spread achieve the same thing but save a hell of a lot in transaction costs, margin and stuffing around?
Edit: Found it, turns out it was good old IG!
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