• Registered: 2009-04-19
  • Posts: 90

Topic: CFD's + Options

Hi all,

I was speaking to a colleague who regularly trades CFD's with a broker who uses the market maker model, complaining about stops often being bypassed.

I was wondering about the flaws of converting long positions to synthetic calls/short positions to synthetic puts < fair value - and maintaining a portfolio of these positions, so as not to worry about stops?

Decay, extra commissions and slippage are coming to mind, but would appreciate any further suggestions from the pros if possible!

Professional amateur
  • From: Nazareth
  • Registered: 2006-12-22
  • Posts: 4,565

Re: CFD's + Options

klyveld wrote:

Hi all,

I was speaking to a colleague who regularly trades CFD's with a broker who uses the market maker model, complaining about stops often being bypassed.

I was wondering about the flaws of converting long positions to synthetic calls/short positions to synthetic puts < fair value - and maintaining a portfolio of these positions, so as not to worry about stops?

Decay, extra commissions and slippage are coming to mind, but would appreciate any further suggestions from the pros if possible!

CFD brokers won't have options on the underlying, and listed securities won't have the problem with stops. Why not simply trade the call or put if you're concerned about stops going unable due to gaps?

All your arb are belong to us.

riskarb's Website

  • Registered: 2009-04-19
  • Posts: 90

Re: CFD's + Options

Hi RA,

Apparently these folk offer CFD's/shares/ops together www.*m*markets.com.au: * = c

My thinking was after unrealized gains on the position, to convert to the synthetic, since this broker doesn't offer trailing stops - to ride out the position
But I see your point about the natural over the synthetic - I'm trying to over-complicate things as usual

Professional amateur