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Trading Bonds

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Marshall Said:

Can you make just as much profit trading financial bonds as you can trading short term stock options?

We Answered:

Bonds are easier to make a profit than options.
Options are written with various factors which make the price at a premium.
If you're writing them, you can make money easier than "trading them.

Eva Said:

How to get a complete list of the trading symbols for all stocks, bonds and mutual funds?

We Answered:

Hector Said:

Trading volume of bonds near maturity date?

We Answered:

I don't know specifically, but unless there's some special circumstance (like the company is in danger of defaulting on the bond), there's not really much reason to trade a bond if it's close to the maturity date. It's not like the value is going to change much, if at all.

Fernando Said:

Which brokerage / entity do you think is best for trading Corporate Bonds for the average investor?

We Answered:

corporate bends are considered a spread product that trades on an interest rate spread over treasiuries. the reason being the credit risk associated with corporates unlike treasuries which are considered risk-free due to the backing of the full faith and credit of the u.s govt guarantee to pay interest and principal in a timely manner.
therefore, i would always watch these spreads which in general are wider the lower the credit rating of the bond issue. now, for example, corporate bond spreads are at their widest in many years due to the sub-prime mess we're in and spreads have widened tremedously. i personally think that would be a good time to buy investment grade or higher corporates ( A rating or higher).

however, i wouldn't trade any kind of bond if i were a retail investor. i would buy an investment grade diversified bond mutual fund because the professional managers are much better geared to identify value, credit risk, and interest rate risk. besides, retail usually ends up buying what we call odd-lots which are usually marked up by almost 3% even if the brokerage shows no commismission on the confirmation.

the fixed-income markets (bonds) are much bigger than the equity markets (stocks). i think the total par value of traded treasuries alone in one trading day is $500 billion. if you add all other bonds ( corporates, mortgages, munis, asset-backed) we're talking over $1 trillion a day...much higher than the value traded on the nyse and nasdaq ( don't have exact #'s on those).

in summation, now is a good time given where spreads are to invest in corporates, but i storngly encourage you to buy a professionally managed fund with not a long duration (akin to maturity)

as to the firms who trade, any big investment bank does them. but not all online brokers do. they may sell them and buy them from you, but they don't make the markets. they simply mark-up or mark-down and theu do the business with the same investment baks i referred to like goldman, merrill, morgan stanley, smith barney, deutsche bk, jpm, etc...

pimco has some great group, fidelity...merrill, lehman also..they have their own index measurements which are used in the industry as benchmarks against which any bond portfolio can be evaluated.

Suzanne Said:

what's the general term for trading stocks, bonds, mutual funds, etc?

We Answered:

Stocks, ETFs and mutual funds are equity. Treasuries, municipals, mortgages, bonds, etc are fixed income. Anything you own in your portfolio are "assets". Commodities are things such as oil, gold, copper, steel, etc which are a good hedge against inflation. Commodities have been in the news lately mainly due to the value of the dollar falling and rising vs other foreign currencies.

    Trading In The Stock Market

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