Long/Short Strategy

Closing prices today:
BAC: $8.02   $32 641.40 short $-284.90
C: $32.71 $32 710.00 $+350.00

Profit: $65.10

original $ in trade: $64 716.50
profit: 0.10%

An experiement with Long/Short Strategy

Ok so using my limited knowledge on long/short strategy to test out how it works using two companies.

Currently, as I want to keep them in the same sector, with relatively same market cap, I am using BAC and C.

Long 1000 C for $32 360.
Short 4070 BAC for $32 356.50

current spread = $3.50 due to rounding to nearest share


Will look at over the coming week or so how this strategy works.  Clearly just randomly picking stocks, not doing any actual investing.




sidenote from school:  as this is a blog and I do need to vent:

I am out of motivation to try in school, not making money, not getting good grades, being lazy as hell.  Need to rectify this or things wont go well this summer.

Research in Motion Risk Arbitrage Idea

Rimm currently has a bid/ask on the TSX of:

17.99/18.05 Canadian dollars

This means you can currently sell 1000 rim shares for $17990.00 +commission.

RIMM is trading in the US at:

17.34/17.35$ US Dollars.

Currently the conversion rate of US to Canadian cash rate using TD is:

1.0223

Meaning you can buy 1000 Rimm Shares for 17736.91 Canadian Dollars +commission.

Not really profitable on small level, but calculate a larger amount, say 1000 shares (still same commission)
Buy 1000 shares in US for 17 350 USD or 17 736.91 CAD, Sell 1000 Shares in Canada for 17 990.00 CAD.  Your unrealised profits are 17 990 - 17 736.91 = $253.09

Risks:
-Holding while waiting for prices to converge
-Currency risk.

School Life.

Been very busy lately. noticing I still need to work on organization. Realistically the work isn't that hard, its finding the time to do all of it, pay bills, and still keep a social life. Was sick last week so I have a bunch to catch up on, plus two major assignments due this week, and another midterm on Friday. Marks have been ok, lately they have been dropping. Time to get my ass back in gear and get'r'done.

A logical Argument on HFT

Regulating HFT will cause Volatile markets. Volatile markets cause people to lose money. Therefore, Regulators want you to lose money. Debate.

Admitted!

Was admitted to Carleton University for Quantitative and Mathematical Economics for September!


Only took 3 years to get in...

Short USA conviction

I added a few more otm SHY options the other day (remind me to rant about the execution given to me by my broker...market was 0.10/0.15, market filled me at 0.15 then dropped to 0.05/0.10)...ANYWHO

I am now convicted that the USA will indeed default on their short term loans. If not default, they will create a QE3 which will roll their short term debt into long term debt, essentially doing the same thing that Greece is doing (except Moody's doesn't threaten to lower US debt for the rollovers). BUT by rolling their debt, people will begin to demand more interest for short term loans because of the risk of default on the ever growing debt crisis that the USA has yet to resolve. This higher interest idea came to me after how poorly the 2y auctions have been doing. People clearly do not want to buy bonds at this low of a rate anymore, if nobody is there to buy, the rate will go down until someone starts buying.

Obama reported he wanted to cut 20billion a year over the next decade...even by rolling your debts into longer term debts, your still paying interest, and that debt is going to grow exponentially.

Realistically, If shy drops 3% I will be a happy person (81.00). Lower than that I would be ecstatic.