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URL:  http://boards.fool.com/a-side-note-you-can-short-corp-bonds-on-ib-as-30535504.aspx

Subject:  Re: The One Share Club Date:  2/10/2013  10:00 PM
Author:  aleax Number:  73671 of 77713

A side note, you can short Corp bonds on IB as well. Generally they require larger size. Issues I have looked at were 100 bond minimums (~$100k minimum) but IB is forging ahead in a lot of these areas so what is usual is quickly changing.

Apologies in advance for my cluelessness, but isn't a typical corporate bond at $10,000 par...? Haven't bought an individual corporate bond in ages (nor shorted any bonds ever -- as opposed to bond ETFs;-), so maybe everything's changed -- but, it does seem to me as if the 100-bond min translates into roughly a "cool million", not just $100k. Is that wrong...?

Now I realize "one... million... dollars" isn't really a huge amount -- http://www.youtube.com/watch?v=l91ISfcuzDw -- but, having left all the "family money" behind in my adult children's hands in the Old Country when I last moved over 8 years ago, I'm only investing what I've been saving ever since, and even with good income and a frugal lifestyle a million's still a lot for me -- couldn't conceive of plonking that much down on one bond short unless I had make-me-illegal-for-trading inside info about the issuer going bust;-)...

IB's margin call engine from what I've seen on the tape is ruthlessly aggressive. They don't give you a "call" they give you a "5% margin" warning email, and then they liquidate you on automatically if you breach 0% margin.

Yep, that's part of why I'm not with IB -- I have a day job so I can't be wired into the market all the time... I try to position myself to fear no margin call even though everything goes against me by a factor of two, but considering that in such extremes brokers (or even the SEC) could conceivably change margin requirements all of a sudden, I can have no certainty there. OH (OptionsHouse) is slightly costlier than IB (and much less flexible: no market but US ones, no futures, &c) but I do expect a normal margin call should I ever stumble into one -- a day or so to wire more cash or at least decide which positions to close. I couldn't sleep well if I was at IB and used any margin at all... and if I self-forbid from using any margin then IB's advantage is slashed down. Which is why I'm with OH and sleep just great at night;-).

I have some small reservations about the "electronification" of our exchanges and trading, but I have to say, there have been stories of short squeezes, manipulation and various scalping activities by the main traders / MM's on wall street for years before this digitalization. bid/ask spreads used to be 12.5 cents (!!!) at a minimum... do we really want to go back to that time?

I love today's tight spreads -- and don't forget the ability to trade less than a full lot at no extra cost, that's magical for the small investor who still wants plenty of diversification!-) If we have to put up high-speed trading's woes as a cost for that, I'm all for it!-)
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