I bought 100 stocks VT by selling deep-in-the-money option and converting Euros to USD. As usual, the option was exercised the following night, but then IBKR did weird things converting remaining Euros in the account into Dollars. I suspect their auto-conversion kicked-in: for cache accounts they do currency conversion themselves if there is no enough settled amount of USD
But what puzzles me, as settlement for stocks like VT is now 1 day and for FX operations it is 2 days, it means that for 1 day Iâll be short of dollars anyway. How is it possible in a cache account? I am afraid they would do rare things like liquidating my VT holdings to cover for that. Anyone has experience with that? Like if you buy VT having only Euros or Franks in your account, does it work OK?
I plan to sell a put for VT again this week, with sufficient cash balance to cover the purchase (lucky you the Swiss, you donât need the options route). And will leave the cash in Euros. Hope that IBKR will autoFX and not liquidate VT.
I donât want to convert currencies a few day in advance, as it exposes me to the exchange rate risk (VT and the Euro move in tandem).
In the EU, we can not buy US structured products, like ETFs and mutual funds. The EU requires some information in key investor documents that US companies are forbidden to provide, like scenarios for expected return. I can not buy VT on IBKR.
But I can trade derivatives (options). And liquid US ETFs have option trade. By selling a deep in the money put option, I am guaranteed that the counterparty excersizes it, and I get 100 stocks of VT.
Nothing special, TBH. It is a standard way for the Dutch to invest in US ETFs. I do it in a simple way, some people do it more asvanced (and save ± 3 euro on a trade).
I am just a bit uncomfortable with the strange currency conversion things on IBKRâŠ
Hereâs another bit of info, as I just observed how 9000 euro get exchanged to CHF. Any amount less than 20k is treated as an âodd lotâ, which means a spread does apply on the manual currency conversion. I have set a sell limit of 0.94 for my 9000 euro, and the sale occurred when the rate was 0.94007, which means the currency conversion cost was 2.63.
Now I wonder if there is anything to add to the 0.03% of the automatic currency conversionâŠ
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