Easiest Ways to Short the Market

[chops_a_must]

I know this is a total 'noob' question, but I notice some other members wondering the same thing. So, what are some easy ways to short the XAO? Are put options listed under their own code etc.?

I'm not seriously considering trading like this myself at the moment, but would like to monitor it throughout this correction so I have the option (pardon the pun) of dealing with it next time.

[professor_frink]

I know this is a total 'noob' question, but I notice some other members wondering the same thing. So, what are some easy ways to short the XAO? Are put options listed under their own code etc.?

I'm not seriously considering trading like this myself at the moment, but would like to monitor it throughout this correction so I have the option (pardon the pun) of dealing with it next time.
there are put options on the XJO.
Alternatively, there is CFD's, index futures(my personal choice), and options on the futures contract.

[chops_a_must]

there are put options on the XJO.
Alternatively, there is CFD's, index futures(my personal choice), and options on the futures contract.
Is there a code for the puts on the XJO?

Do you need a live data stream tied in with a certain trading platform for the index futures and the futures contract?

Sorry for all the questions, just curious and want to learn as much as I can during the next few weeks.

Cheers.

[professor_frink]

Is there a code for the puts on the XJO?

Do you need a live data stream tied in with a certain trading platform for the index futures and the futures contract?

Sorry for all the questions, just curious and want to learn as much as I can during the next few weeks.

Cheers.

The code is XJO plus an additional 2 letters to identify which series it is. Every different stike/expiry will have it's own 2 letter code attached after XJO- you should be able to bring up the entire series for the index on the ASX site if you don't have access to quotes from your broker.


http://www.asx.com.au/investor/options/trading_information/index.htm

there's a link to the entire options code list on that page.

For futures, I get free datafeed from my broker, otherwise you'll need to get data from somewhere else(where else you can get it from I'm not quite sure-haven't looked around as there's no competing with a free feed!), and you'll need a broker that deals in futures. In order to simply have a look at a chart, you can have a look at delayed data for the futures contract here-

http://www.futuresource.com/charts/charts.jsp?s=API1%21&o=&a=V%3A15&z=800x550&d=medium&b=bar&st=

If you're after some more info on futures, the sfe website would be a good start-

http://www.sfe.com.au/

[>Apocalypto<]

Is there a code for the puts on the XJO?

Do you need a live data stream tied in with a certain trading platform for the index futures and the futures contract?

Sorry for all the questions, just curious and want to learn as much as I can during the next few weeks.

Cheers.

Hi Chops,

You can trade options over the XJO I trade them with Sanford securities.

The option code is XJO then look at the put options on the board.

One peace of advice the options bids and asks dont really start till 10:30 am and that can make things a pain when u want out quick.

CFD's

You can trade cfd's over the XJO.

IG Markets

Offer a 25 per point contract that is based on the xjo with the futures incorporated into it. You can go long and short. It is the xjo during the day and spi at night. Market hours: opens at 9:50am close at 4:30pm reopens 5:00pm till 7:00am. Can help with placing stop under trends as it does move up and down with a influence from the DOW but be warned if you have real tight stops you could wake up to being stopped out and the market keep going in your favor! Great part is no brokerage, it's included

They also offer a mini that's $5 per point.

Pacific Continental

Offer a CFD over the actual XJO,

Normal asx market hours. Contracts are 5% of the current price eg 5800 x 5% = 290 per contract it moves by 1 dollar per point and brokerage is .1% of total value eg 2 x 5800 = 11600 x .1% = brokerage $11.6

As of right now Pacific continental wont let you go short, but the guy i spoke to said you will be able too very shortly. (5 days soon)

So how many contracts you have = your risk per point.

Now you have to pay interest over long CFD positions but interest is paid to you over short positions.

You dont need a live data feed to trade anything i metioned above it all depends on your time frame.

I use snap live shot with Bourse and Sanford. Ig + Pacific offer live feeds.

You can also trade short over the SPI but talk to Frink about that!

Hope that helps.

[dubiousinfo]

As well as put options, there are also put warrants for the XJO. Both have advantages and disadvantages.

The thing that they both have in comon is the "Greeks" You will need to understand the greeks to be any real chance of success.

Wayne and Magdoran have some really excellent stuff on this in their posts. Just have a large box of panadol handy. :D

[wayneL]

As well as put options, there are also put warrants for the XJO. Both have advantages and disadvantages.

The thing that they both have in comon is the "Greeks" You will need to understand the greeks to be any real chance of success.

Wayne and Magdoran have some really excellent stuff on this in their posts. Just have a large box of panadol handy. :D
I caused a bull market in Panadol in my town when I was learning.

Go long Panadol lol

[surfingman]

Thanks for the info greatly appreciated, i am also a newbie but trying to learn, just downloaded from asx site and interested in AOE options.

-Please correct if wrong but from left to right the AOEBQ is stockcode which i would contact broker for a quote on the option.

-Then its expiry date

-Not sure what the 0.8 is?

-Not sure what A is maybe a class?

-Then its packet size 1000 shares



AOE Call Options
AOEBQ 29-Mar-07 0.8 A 1000
AOEBT 29-Mar-07 0.9 A 1000
AOEBU 29-Mar-07 1 A 1000
AOEBX 29-Mar-07 1.1 A 1000
AOEBY 29-Mar-07 1.2 A 1000
AOEB2 28-Jun-07 0.8 A 1000
AOEB3 28-Jun-07 0.9 A 1000
AOEB6 28-Jun-07 1 A 1000
AOEB7 28-Jun-07 1.1 A 1000
AOECF 28-Jun-07 1.2 A 1000
AOECH 27-Sep-07 0.8 A 1000
AOECI 27-Sep-07 0.9 A 1000
AOECL 27-Sep-07 1 A 1000
AOECM 27-Sep-07 1.1 A 1000
AOECP 27-Sep-07 1.2 A 1000

AOE Put Options
AOEBR 29-Mar-07 0.8 A 1000
AOEBS 29-Mar-07 0.9 A 1000
AOEBV 29-Mar-07 1 A 1000
AOEBW 29-Mar-07 1.1 A 1000
AOEBZ 29-Mar-07 1.2 A 1000
AOEB1 28-Jun-07 0.8 A 1000
AOEB4 28-Jun-07 0.9 A 1000
AOEB5 28-Jun-07 1 A 1000
AOEB8 28-Jun-07 1.1 A 1000
AOEB9 28-Jun-07 1.2 A 1000
AOECG 27-Sep-07 0.8 A 1000
AOECJ 27-Sep-07 0.9 A 1000
AOECK 27-Sep-07 1 A 1000
AOECN 27-Sep-07 1.1 A 1000
AOECO 27-Sep-07 1.2 A 1000

There are 2 categories calls and puts which are buys and sells. Thanks in advance, help is greatly appreciated.

[dubiousinfo]

Surfingman

For the basics on options the ASX has good material, you will need to register but it is free.
http://www.asx.com.au/investor/education/classes/online.htm#options
After you have got the basics, do a search on ASF.
You will need to learn the basics to be able to follow a lot of the posts on ASF.
Hope this helps.

[Bobby]

I caused a bull market in Panadol in my town when I was learning.

Go long Panadol lol

:D :D

[chops_a_must]

I caused a bull market in Panadol in my town when I was learning.

Go long Panadol lol
Lol!

Thanks for all the info on this thread guys! A lot of reading material for the next few days.

Cheers.

[dubiousinfo]

I have found that it works out much cheaper if you buy the panadol by the kilo. You will need around 1 kilo for the option basics and another 2 or 3 kilo's for the greeks.

After that you can get into the advanced stuff :D

[chops_a_must]

I have found that it works out much cheaper if you buy the panadol by the kilo. You will need around 1 kilo for the option basics and another 2 or 3 kilo's for the greeks.

After that you can get into the advanced stuff :D
Oh mate. Have you ever tried reading Husserl?

This stuff is a piece of cake compared to that...

[surfingman]

Surfingman

For the basics on options the ASX has good material, you will need to register but it is free.
http://www.asx.com.au/investor/education/classes/online.htm#options
After you have got the basics, do a search on ASF.
You will need to learn the basics to be able to follow a lot of the posts on ASF.
Hope this helps.

Thanks i will check it out now, plently of panadol on hand here im on crouches for a few weeks in a sprained ankle.... :)

[retroaugogo]

Easiest way to short the market.

Probably stay out til it rises again.

Many people can't trade on the short side.

[nizar]

Just a question:
How do you short stocks (without leverage), which brokers offer this and on which stocks?
And for the TradeSim people im guessing you can design systems that go short on this program just as easy as those that go long, but universe will become more of a consideration as you probably cant short every stock on the asx...

As you can probably see, im a beginner when it comes to shorting...

[MichaelD]

How do you short stocks (without leverage), which brokers offer this and on which stocks?Without leverage is difficult, but some options are;

1. Tricom at $140 per trade or so (but you need to deal with them on the phone)
2. CommSec will let you short daytrade (but will close all shorts by the end of the day), and
3. TraderDealer have an online shorting stock borrowing/shorting facility.

Shorting with real physical shares isn't cheap nor convenient and is much easier to do with CFDs - you don't have to use the leverage if you don't want to. Also, there's always a chance that the real shares could be recalled and your position closed without you wanting it to be. I have no idea how common or rare this is.

Another gotcha with shorting to be aware of is you are liable to pay any dividends whilst you're short.

And another gotcha with CFD providers is that if the underlying goes into a trading halt, you'll have to pony up 100% of the margin.


And for the TradeSim people im guessing you can design systems that go short on this program just as easy as those that go long, but universe will become more of a consideration as you probably cant short every stock on the asx...Yes, TradeSim can simulate short trading as well as long trading.

There's a list on the ASX of shortable stocks which is fairly restrictive. TraderDealer have a slightly larger universe, and CFD providers a larger universe again.

I'll save you some testing time: systematic long term trend following only works going long, not short (the lowest a share can go is zero, but there is no limit on how high it can go).

(Actually, on second thoughts - better to prove this yourself to your satisfaction.)

[wayneL]

Without leverage is difficult, but some options are;

1. Tricom at $140 per trade or so (but you need to deal with them on the phone)
2. CommSec will let you short daytrade (but will close all shorts by the end of the day), and
3. TraderDealer have an online shorting stock borrowing/shorting facility.

Shorting with real physical shares isn't cheap nor convenient and is much easier to do with CFDs - you don't have to use the leverage if you don't want to. Also, there's always a chance that the real shares could be recalled and your position closed without you wanting it to be. I have no idea how common or rare this is.
This is one of the main reasons I moved to trade stocks in the Evil Empire.

Want to short a stock? Just press sell. Brokerage is still < $0.01 per share.

Re recalling shares: Has not happened to me, but has happened that shortable shares to borrow are not available.... even happened on QQQQ once. But is quite rare really.

[nizar]

I'll save you some testing time: systematic long term trend following only works going long, not short (the lowest a share can go is zero, but there is no limit on how high it can go).

(Actually, on second thoughts - better to prove this yourself to your satisfaction.)

What you're saying makes sense, but Then what do you say to guys like Ed Seykota or Bill Dunn, trend followers that (claim to) just as easily in down as in uptrends.

[wayneL]

What you're saying makes sense, but Then what do you say to guys like Ed Seykota or Bill Dunn, trend followers that (claim to) just as easily in down as in uptrends.
They trade commodities, a different kettle of fish.

[MichaelD]

Yep, my fault for a fuzzy answer - I was referring to long term trend following of shares. Futures/currencies are a different ball game.

[Kauri]

And another gotcha with CFD providers is that if the underlying goes into a trading halt, you'll have to pony up 100% of the margin.



Are you sure, I have been through several trading halts and never had to pony up anything??

[MichaelD]

Are you sure, I have been through several trading halts and never had to pony up anything??It's in the PDS for IG Markets for stocks you've shorted that they may margin call you to 100% if the stock goes into a trading halt.

[Kauri]

It's in the PDS for IG Markets for stocks you've shorted that they may margin call you to 100% if the stock goes into a trading halt.

Is that under the Suspension and Insolvency clause, or maybe the Force Majeure clause???? Below is all I could find.








We will specify the margin percentage required on your CFD at the time that you open the CFD. However, we


reserve the right to alter that percentage during the time that the CFD remains open (including, for example, under


volatile market conditions; see section 5.15). In extreme conditions or situations percentage or per-contract margin


requirements higher than those shown in the Contract Details may apply. This happened in the market crash of


October 1987, the Kobe earthquake of 1995 and the aftermath of 11 September 2001. It could also occur if, for


example, the company to which a share CFD relates goes into receivership or insolvency. If any such event should


occur, and we increase the required margin levels as a result, we will take steps to notify you if you already have an


open CFD, or, if you wish to open a new CFD. We will notify you if we change the margin percentage on an open


CFD, and the further amount of money required from you to keep the CFD open.

[MichaelD]

Below is all I could find.I wonder if this was one of the recent modifications to their PDS as I'm sure I read specific mention of "up to 100% of the value of the position" in their PDS - what you're quoting is much more vague that what I remember reading.

[Broadway]

I'm new to shares as well, but it seems to me that the best way to make money consistently with common shares on an intraday session is by shorting.

There seems to be plenty of days where you get long steady downward fades that represent a very easy ride to get on and watch it fall all day long.

On the other hand, shares seem to rise in one of only 2 ways, both really hard to catch and/or predict. Either by gapping up overnight or by climbing so fast intraday that unless you have some computer software that alerts you to a stock about to take off, then I usually miss it or it mostly doesn't cover brokerage. Stocks that rise for a long time at 45' are rare intraday, and usually only when the all ords is having a gradual up day as well. Definately rare on a down day.

On that point, if anyone does know of something like an intraday RSI trendcatcher program that works real time with an ASX monitoring program, could they mention something here please. (thats for intraday trading, not end of day.)

Back to shorting common shares. I am looking into the shorting method mentioned at the TraderDealer site called 'securities lending'. I dont fully understand it yet but they have a relationship with Opes that allows you to short the market over any time frame at a cost of $50 plus the in and out fee of $33 each. ($116 total) So you probably want to be trading with at least 30k. This means the share has to decline at least 0.38 % (if you use 30k) before you start making money, which to me doesnt seem too hard, given the long declines I see on some intraday stocks.

The other advantage is the 'no up tick rule' which can be a cause of short squeezes I believe. ( I think this is where the price starts rising and shorters cant exit their trade because they need a down tick to do it. Can be a costly rule apparently.)

CFDs I guess are another option, you can go long or short on these, but I think the real killer with these is the interest rates that really wipe your initial capital in the long run.

So i'm looking into TraderDealer/Opes, currently their application process is a little more complicated than the website would have you believe. Apparently the shorting is executed through the same common webiress program that alot of brokers allow clients to trade with. And you just need to open a macquarie CMT account that holds the funds while you trade and gives you about 5.5% interest while your money sits in the account.

So hopefully this info can help some other beginners like me.

ps. I dont work for trader dealer or opes, if the question arises. I will keep this forum informed of how it all goes if people want to know.

Happy trading. :D

[nizar]

This is one of the main reasons I moved to trade stocks in the Evil Empire.

Want to short a stock? Just press sell. Brokerage is still < $0.01 per share.

Re recalling shares: Has not happened to me, but has happened that shortable shares to borrow are not available.... even happened on QQQQ once. But is quite rare really.

Wayne,

With IB can you go short just as easily as you go long?
Do you know if you can you short all the stocks in s&p500?
Or is it fairly restrictive over there as well...?

With an easier to short market and such cheap brokerage, i think i may be joining you soon in the Evil Empire.

[professor_frink]

Wayne,

With IB can you go short just as easily as you go long?
Do you know if you can you short all the stocks in s&p500?
Or is it fairly restrictive over there as well...?

With an easier to short market and such cheap brokerage, i think i may be joining you soon in the Evil Empire.

Evening Nizar,

IB have stated that they do have plans to offer the ASX at some stage(I haven't heard of a timetable for this yet). If they can offer anything close to the kind of shorting ability/ brokerage rate that they offer for the US market, you may not need to be make the move. Might be something to look into.

[nizar]

Evening Nizar,

IB have stated that they do have plans to offer the ASX at some stage(I haven't heard of a timetable for this yet). If they can offer anything close to the kind of shorting ability/ brokerage rate that they offer for the US market, you may not need to be make the move. Might be something to look into.

Thanks Prof.
I'll look into it.
Either way looks like ill be signing upto IB.

[wayneL]

Wayne,

With IB can you go short just as easily as you go long?

Yes, as simple as pressing the "sell" button. You just need to have the "margin" account.

Do you know if you can you short all the stocks in s&p500?
Or is it fairly restrictive over there as well...?

Here is a list of shortable stock http://www.interactivebrokers.com/en/trading/ViewShortableStocks.php?cntry=usa&tag=United%20States&ib_entity=llc&ln= (make sure you have plenty of bandwidth, the list goes on forever ;)) In practise, I never even check and rarely strike one you can't short. Occasionally you'll run into one that's not available at that point, but rare.

With an easier to short market and such cheap brokerage, i think i may be joining you soon in the Evil Empire.

Be aware of exchange rate risk which can be a factor.

Cheers

[nizar]

Be aware of exchange rate risk which can be a factor.

Cheers

Oh damn... never thought of that... :eek:

If AUD/USD achieves parity in a few years, then that wouldnt be all too good for a portfolio is US dollars... Hmm... :eek:

[wayneL]

Oh damn... never thought of that... :eek:

If AUD/USD achieves parity in a few years, then that wouldnt be all too good for a portfolio is US dollars... Hmm... :eek:

You can hedge buy buying back your AUD via forex or currency futures... or actively trading the moves ;)