Replies to post #71077 on China Growth Stocks

[viking86]

CCME: thanks for the insight. I sold only some trading shares in order to boost my buying power. My broker requires 100% margin even for writing puts.

[tenenbaum]

CCME - Just quick points regarding synthetic long replacement:

1) Buying the synthetic long forces short exposure onto the market maker who sold you the position. In general, the person(s) who sold you the position need to buy the stock from the market in order to hedge their position at that point.

2) Shorting the stock and buying the synthetic is not riskless/costless as the stock borrow rate needs to be paid and there is always a threat of forced buyback. At ~60% annualized borrowing rates, these costs cannot be ignored. I also notice that IB currently has shares available at the moment which would seem to indicate that there has been short covering recently.


I'd also like to wish everyone a Happy Chinese New Year. Gong Xi Fa Cai!