Option trading to avoid overnight fees over a short position
Option trading to avoid overnight fees over a short position
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David · External communityPost link
External question — Personal Finance Stack Exchange
Author: David
Original post: https://money.stackexchange.com/questions/157339
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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I do a lot of short selling as a day trader. There is a pattern that I trade often. This one asks me to short and keep my position for several days. The problem I have is that the broker charges too much to keep my position overnight. On MEDS in the last days, I could pay up to 500 USD to keep my position overnight. How can I use options as a workaround? Can you give me an example?
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Bob Baerker · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Bob Baerker
Original post: https://money.stackexchange.com/a/157358
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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If the implied volatility is reasonable (not likely if the borrow rate for shorting is sky high), you could buy a high delta put (the put's strike price is much higher than the stock's price).
To offset the aforementioned IV, you could utilize a vertical spread but then you'd have delta correlation issues.
Alternatively, you could create a synthetic short position - sell an ATM call and use the proceeds to buy the same series ATM put.
None of this helps you as far as I can see, MEDS doesn't offer options.
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Quoted from Forex.com.bd-Editorial External answer — Personal Finance Stack Exchange Author: Bob Baerker Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/a/157358 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. If the implied volatility is reasonable (not likely if the borrow rate for shorting is sky high), you could buy a high delta put (the put's strike price is much higher than the stock's price). To offset the aforementioned IV, you could utilize a vertical spread but then you'd have delta correlation issues. Alternatively, you could create a synthetic short position - sell an ATM call and use the proceeds to buy the same series ATM put. None of this helps you as far as I can see, MEDS doesn't offer options.
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