trading strategy- thoughts?, page-2

Hi Poly,

Yeah, sure sounds good on paper. But after the div day, you (and every other person holding for the div) will sell, driving the price down by about the amount of the dividend (according to the "efficient market" theory). With your 10x leverage, your margin will be wiped out instantly and unless you post more capital pronto, you'll be forced by your broker to sell at the bottom.

Sure you might get your stake back when you receive the div, but you might have sold at a bigger loss! So your strategy is *far* from risk-free.

Leverage cuts both ways. IMHO, you'd have to be very brave or very foolhardy to be using large amounts of it in this market.

IC