Tuesday, December 19, 2006

Closing the Australian Beta Trade

As the model has now switched to sell, I closed out the Australian positions I opened to increase my portfolio's beta. The results are as follows:

This is a margin account and so all the money to buy the shares was borrowed and the cost of interest needs to be figured into the profit. All the numbers are in Australian Dollars (1 AUD = 0.78 USD).

Overall I am happy with the result of this experiment :) But the after tax profit is a small fraction of the gross profit. Trading 2 NDX E-Mini (NQ) contracts is a similar size trade in terms of the underlying value of shares traded. Here is an imaginary NQ trade on Interactive Brokers which generates the same pre-tax profit of AUD 900. The results (in USD) would be as follows:

This trade actually provides more beta than the Australian trade I actually did. Fees are dramatically lower and the tax rate is lower too. The after tax profit on the Australian trade was USD 284. By the way, trading a single stock in Aus would only have lowered the combined fees by AUD 40 over what I paid to trade 3 different stocks as for this size trade CommSec charge 0.12% of the trade value (+ an AUD 10 fee for each trade on a margin account).


StealthBucks said...

Hi mOOm, Sorry about the delayed posting. Welcome back and when are you headed to Vermont? Just kidding. We had "The Great Storm of 05" out here and we lost power for 4 days so I have been out of the loop. We lost a good $2,000 in food (insurance claimable) and had to hole up in a hotel for a while. With the exception of an expensive Cedar the homestead held up. Congrats on the good net worth showing for 06. I hope you post a nice Taddahhhh!!! kind of summary. Your % growth is stellar and hedge fund worthy for a major Wall Street bonus. Show a little bit more time and I suspect CT or NY bound is in your cards. Maybe you too can lose a cool 4 Bill plus and live to tell your friends :-). My wife's little IRA (70K) is up 43% YTD. Does that count for anything? OK overall, we will come in around 19% but it's always more fun to brag about the wins. Happy Hannakuh and other misc Holidays...

Sorry If I posted before. Hosed this up.

StealthBucks said...

Oops... "Storm of 06"

mOOm said...

Thanks for the nice comments. You guys are really having some rough weather this year. I doubt I'll actually make this year's goal in the remaining two weeks and a major negative could happen before that.