doctorpot1 shared · Mar 29, 2023 08:42

SmartSave, an option trader's best friend

Imagine having a friend who is always looking out for your finances. When we are in financial danger, it steps in to help us. When we are prosperous, it helps us invest our spare cash, while we are still deciding which is your next big trade. That's what SmartSave is.

SmartSave helps us to invest our spare cash into money market funds, which invest in tbills, so that we can earn close to tbill's interest rate daily. So while we are analysing which stock to buy, or when we are too busy with work, it helps us manage our cash.

This is especially helpful for options trader as it helps us balance our margin risk while trying to get us more yield from cash plus. As options trader, we tend to be trading on margin even if that is not what we wanted. For example, we might be selling a cash secured PUT option (CSP), but Moo Moo will not lock up 100% of the cash on that trade, they will instead only lock up about 50% of it, and then adjust this amount daily based on our option's performance. Maybe we might be doing a bear CALL spread or bull PUT spread, those are on margin too.

So instead of managing our margin daily, to ensure that we have sufficient cash to cover the margins. SmartSave does that for us by drawing on our Cash Plus pool ( $CSOP USD Money Market Fund (SGXZ96797238.MF)$) when needed. Very helpful for option traders, so as to reduce our risk of getting margin called in our sleep (assuming we have cash in cash plus). Thus, we can sleep better knowing that our friend is always looking out for us

You can also check out this post on how cash plus can be used with option trading to increase our yield here:

doctorpot1: Money Market Funds is like a flexible T-Bill for investors, and "hack" for options trader

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greencandle : Thanks for sharing. I'm selling put options on a monthly basis, so if I activate SmartSave, does it mean it has no impact or margin call assuming I have enough cash to cover my puts?

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doctorpot1 OP greencandle : if you have enough cash to cover your put option then nothing much to worry. you will see smartsave putting money into cash plus then taking money out as required. But that is on the assumption that $CSOP USD Money Market Fund (SGXZ96797238.MF)$ don't collapse or run away with our money la do keep a little bit extra just in case the margin calculation is wrong too. cause systems sometimes might have bugs.

from my experience, I never had to worry about margin call as all my puts are cash secured put.

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greencandle doctorpot1 OP :

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doctorpot1

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crawled out of poverty, working towards FIRE!! (financial independence, retired early)

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