Idle Cash - Exploring the options... | Metals Mine

Options

Permalinks
Print Thread

Similar Threads

COT report... futures or futures and options report? 11 replies

Metals Outlook: Cash and Futures 154 replies

UK Spreadbetter for Oil Futures, Dow Daily Cash and Forex 1 reply

Attachments: Idle Cash - Exploring the options...
Exit Attachments

Idle Cash - Exploring the options...

  • #1
  • First Post: Mar 5, 2020 1:52pm Mar 5, 2020 1:52pm
I'm starting this thread to best address the use of idle cash. This doesn't really apply to day traders, but those of us who trade longer term and sit in cash for weeks or months at a time need to put their money to use.

Let's look at some of our options:

 

  1. Staying in cash at your broker. A few brokers like Interactive Brokers will pay decent interest, but most brokers only pay around 0.05% interest. If your broker does pay good interest simply keeping a cash balance with them may be the best solution for you.
  2. CDs are another option at some brokers, but that ties your money up so it isn't ideal.
  3. T-bills are risk free and pay interested, but they can be a hassle to buy and tie your money up so that's not ideal either.
  4. Cash equivalent ETFs can deliver good interest, but they're not risk free. This is my preferred choice and the option I'll be focusing the most on.

Self-sufficiency is the greatest of all wealth. - Epicurus
  • #2
  • Mar 5, 2020 3:28pm Mar 5, 2020 3:28pm
Historically my favorite place to park cash has been in ultra short term corporate debt ETFs. This gives you yield with little default risk, and there's little price risk since its ultra short term debt so factors like inflation don't really matter for the ETFs value. Here's a chart of JPST for example. Look closely at the price axis, all it does is slowly creep up then it issues a dividend, drops, and creeps higher again. The overall price never changes much.

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot3.png Size: 33 KB


Here are a few ETFs I'm looking at:

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 24 KB


GSY and JPST seem to be the best of the bunch. GSY seems to have a higher yield, but lower 1y total return compared to JPST. Volatility is also lower on JPST, but the way I calculated it isn't perfect... BIL is best if you want your money completely safe. Evidently MINT is the worst choice any way you look at it.

Note that I picked a terrible time to do this. The Fed cut 50bps this week and I'm not sure how accurate these Yields are. BIL is probably correct while all the others are too high.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #3
  • Mar 10, 2020 1:50pm Mar 10, 2020 1:50pm
What does everyone else do with idle cash?
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #4
  • Mar 11, 2020 2:13pm Mar 11, 2020 2:13pm
T-Bills are looking better and better as each day passes. A small return and no default risk vs a slightly bigger return and minor default risk. If this keeps up I'll sell the GSY I already own in favor of BIL.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #5
  • Mar 18, 2020 12:48pm Mar 18, 2020 12:48pm
No brainer - buy UKOIL CFD's (IG-broker) no interest, spot today is @26.
Buy UKOIL position (Equity/GBP x 3) take-profit limit @ 45 from quote under 27.

Estimated profit = (45/27=0.666%x3)=+200%-GBP CAPITAL GAIN
Estimated holding time is 2 years or less.

Very easy money.
Count Of Antwerp
  • #6
  • Mar 23, 2020 1:46pm Mar 23, 2020 1:46pm
Quoting countaccrue
No brainer - buy UKOIL CFD's (IG-broker) no interest, spot today is @26. Buy UKOIL position (Equity/GBP x 3) take-profit limit @ 45 from quote under 27. Estimated profit = (45/27=0.666%x3)=+200%-GBP CAPITAL GAIN Estimated holding time is 2 years or less. Very easy money.
That sounds like a trade to me. lol
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #7
  • Mar 24, 2020 2:22pm Mar 24, 2020 2:22pm
Quoting EF5
I'm starting this thread to best address the use of idle cash. This doesn't really apply to day traders, but those of us who trade longer term and sit in cash for weeks or months at a time need to put their money to use. Let's look at some of our options: Staying in cash at your broker. A few brokers like Interactive Brokers will pay decent interest, but most brokers only pay around 0.05% interest. If your broker does pay good interest simply keeping a cash balance with them may be the best solution for you. CDs are another option at some brokers,...
Just invest in buying of options.
Use it like a lottrey.
Buy puts when you think the market is going to dive.
Buy calls when you think the market is going to pullback or react on bailout news.
In 3 months you will have at least 15 days chances.
Even if you hit 60% using fixed amount of trade.
Practice makes a person perfect
  • #8
  • Mar 25, 2020 12:06am Mar 25, 2020 12:06am
Quoting EF5
Historically my favorite place to park cash has been in ultra short term corporate debt ETFs. This gives you yield with little default risk, and there's little price risk since its ultra short term debt so factors like inflation don't really matter for the ETFs value. Here's a chart of JPST for example. Look closely at the price axis, all it does is slowly creep up then it issues a dividend, drops, and creeps higher again. The overall price never changes much. {image} Here are a few ETFs I'm looking at: {image} GSY and JPST seem to be the best of...
Idle cash has to be one of the most underrated discussion points for finance, depending on trading activity the difference where you keep your idle cash can be massive.

Short term treasury notes have been my go to but looking to try out some ETFs after reading this thread, great post and insight.
rennstimp
  • #9
  • Mar 25, 2020 2:03pm Mar 25, 2020 2:03pm
Quoting renNstimpy
{quote} Idle cash has to be one of the most underrated discussion points for finance, depending on trading activity the difference where you keep your idle cash can be massive. Short term treasury notes have been my go to but looking to try out some ETFs after reading this thread, great post and insight.
Interestingly 1 and 3 month US Tbills now have a negative yield.

GSY, my go-to cash equivalent ETF for years is actually down 4% recently. Prior to this it had been very stable, only moving for dividends accruing. Apparently the market is pricing in some default risk now. I’m not surprised by that, but I was hoping it wouldn’t falter during a recession.

At the moment I’m just going to hold cash at my brokers because the 0.05% I’m getting there is about the best you can do for a riskless cash position.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #10
  • Edited 1:49am Mar 26, 2020 1:24am | Edited 1:49am
Quoting EF5
{quote} Interestingly 1 and 3 month US Tbills now have a negative yield. GSY, my go-to cash equivalent ETF for years is actually down 4% recently. Prior to this it had been very stable, only moving for dividends accruing. Apparently the market is pricing in some default risk now. I’m not surprised by that, but I was hoping it wouldn’t falter during a recession. At the moment I’m just going to hold cash at my brokers because the 0.05% I’m getting there is about the best you can do for a riskless cash position.
Ever since treasury notes tanked a couple of weeks been using mainly a spread of equity ranging from 5-6 positions of strong non-cyclical with abit of healthcare/energy/materials for idle cash. Beating inflation rates bringing in return of 0.42% beating the objective thus far

While although Ill admit it has been abit of a pain in the ass when looking to pull from to liquid for trading, it has out-preformed my usual idle cash returns from treasury notes in the past. Although the sample size is extremely small thus far.

I could post details if youre interested, its a fairly simplistic low beta portfolio that keeps decent volume.

Honestly though even though I think finding good places to hold idle is a great move that adds up over-time given the state of the current market and how much you're trying to capitalize on movement/opportunities, you might have it right. Especially with opportunity cost, which is always something to consider
rennstimp
  • #11
  • Mar 26, 2020 2:46pm Mar 26, 2020 2:46pm
Quoting renNstimpy
{quote} Ever since treasury notes tanked a couple of weeks been using mainly a spread of equity ranging from 5-6 positions of strong non-cyclical with abit of healthcare/energy/materials for idle cash. Beating inflation rates bringing in return of 0.42% beating the objective thus far While although Ill admit it has been abit of a pain in the ass when looking to pull from to liquid for trading, it has out-preformed my usual idle cash returns from treasury notes in the past. Although the sample size is extremely small thus far. I could post details...
It sounds like there would still be a material market risk with non-cyclicals though, right?
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #12
  • Edited 4:07pm Mar 27, 2020 6:18am | Edited 4:07pm
Quoting EF5
{quote} It sounds like there would still be a material market risk with non-cyclicals though, right?
100% they historically will preform in opposite directions. In theory hedging against the other one for super low beta and with the fed printing should outperform inflation/bonds while being somewhat liquid which is the only objective with the spread... Not gonna lie though this shit isnt that liquid and is a pain to manage and even then not entirely 100% in
rennstimp
  • #13
  • Mar 30, 2020 12:20am Mar 30, 2020 12:20am
Quoting renNstimpy
{quote} 100% they historically will preform in opposite directions. In theory hedging against the other one for super low beta and with the fed printing should outperform inflation/bonds while being somewhat liquid which is the only objective with the spread... Not gonna lie though this shit isnt that liquid and is a pain to manage and even then not entirely 100% in
That's an interesting dynamic you bring up... Here's how I see it. If you own non-cyclicals and equities drop then theory yields probably drop too. Non-cyclicals paying dividends would be more attractive considering treasury yields drops. In theory, this does seem to work well, the main theoretical problem I see is interest rate risk. If rates rise then your dividend stock should fall.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #14
  • Last Post: Apr 6, 2020 7:29am Apr 6, 2020 7:29am
Quoting EF5
{quote} That's an interesting dynamic you bring up... Here's how I see it. If you own non-cyclicals and equities drop then theory yields probably drop too. Non-cyclicals paying dividends would be more attractive considering treasury yields drops. In theory, this does seem to work well, the main theoretical problem I see is interest rate risk. If rates rise then your dividend stock should fall.
Yeah im just in cash now with abit in equity, really unconfident with any decisions in past week or so.
rennstimp
0 traders viewing now