Want to copy our trades but your jurisdiction cries foul?

Posted by on May 8, 2017 in ArbMaker News! | No Comments

klinns90At the time of writing our pairs trading, relative value trade research has returned over 20% since inception. That’s a real money return in an Interactive Brokers account.

The service has been fortunate to attract a few clients and one consistent question from US subscribers has been “how can I best replicate the strategy?”

The answer is not straightforward for all subscribers. That’s because we use an equity derivative called a contract for difference (CFDs). This lets us combine leverage with the inherently hedged strategy of long/short.  However, CFDs are classed as swaps in the US and not available to non-institutional traders. Nor do Canada, Hong Kong, Australia, New Zealand or Israel allow them.

For these jurisdictions there are two obvious alternative derivatives already deployed by some of our clients:

  • Equity options
  • Single stock futures

Both require good understanding of the underlying contract structure since they differ from CFDs in one key regard: they have an expiry date. This makes trade duration important.

For example, our trades average 13 days round trip with an upper duration of 54 days. With advanced knowledge of expected duration it is easier to choose key elements like an appropriate contract date and strike price.

We provide the trades and data. Clients not enjoying CFD access choose their instruments.

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