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There are dozens (actually I suspect thousands) of online brokers out there. They all offer the same product, competing with each other in small insignificant details. This stuff, an electronic exchange for capped options and CFDs, could be a game changer. I know I'd immediately abandon the...

>> Why is a simple option spread not sufficient for your purposes? It's complicated to use compared to plain capped option and spot instrument (capped CFD). >> And while, yes, such products may exist in OTC space, Well, I suspect too the *may* part, that's what I'm trying to find out here...

By the way, I see Robert Morse has some connections with Lightspeed Trading, so maybe he can offer a more "broker" view on these things. Currently I have an account with Interactive Brokers and use their API for getting marketdata and sending orders but I write my own stuff. The greatest...

This capping would greatly increase the liquidity on the long run since it would allow the retail sellers like me to entry the market. I'd also need capped CFDs or futures to be able to delta-hedge my sells but nevertheless, the required capital can be computed deterministically. As long as...

This is a perspective of the seller. As a buyer you may have a different perspective, of trying to rip off the other part, but as a buyer I'm never looking into that. 2x the strike price is practically "never" under a normal distribution assumption, and 99% of the times and of the market plays...

Say I'm selling you such an OTC option on GM (currently priced at $36.30). It'd be an ATM call, striked at $36 and under the current condition I'd price it at $1.5. On a lot size of 100, that'd be $150 on your side (the buyer). If the spot price goes up to $72 you receive from me up to ($72 -...

>> Do you think it will be free in the pricing of an OTC pair? I'm not referring to OTC strategies which involve several current options. I mean a new type of instrument for *single* options or futures, which is perfectly equivalent to the current contract, *with* the addition of the cap.

I want that cap "for free" by incorporating it in the very definition of the contract. Both for futures and for options. This would effectively change the game by not allowing black swan events anymore, on the respective instruments.

>> You can "cap a future" buy buying a option on that future. Nope, unless you buy that option for free.

Same thing with short options and obviously my option buyer would have to settle for that.

So, what I have in mind are "capped" options and CFDs (or futures). Let's just cover a capped future, as options are similar. The current exchange-traded contract has no bound on the upper side. The down side has a natural bound, as the stock price cannot drop below zero. But on the upside, it...

Also, I'd like you to comment on the particular type of OTC instruments I have in mind. If they exist already, I'd appreciate if someone would tell me where I can trade them. If not, I'd appreciate your thoughts and telling me weather or not you would be interested in trading them.

Now I know where to start, thanks! :)

Do you know if / where I can trade OTC options? For instance buying or selling butterfly strategies as one "product", with bid and ask prices and volumes, like on a regular exchange. Secondly, I'd need API/automated access to such an OTC exchange. Just like I'm using the API of Interactive...

There's a lot of mathematical masturbation behind volatility forecasting but in essence it reduces to one question: How much margin should I add to my purchase in order to sell it for a profit? That's when both the purchase and the sell are probabilistic.

Just running the improved version of my software on some 300 randomly selected stocks that my laptop can finnish today. I've got 9000 stocks though and need to make this happen faster. Think, try, win or lose - either way, get feedback. Finance or Pharma, same thing.

Again, I wanna reiterate: this is just my personal, independent, qvasi-risk-free idea. If you really want risk-free then buy IBM.

I'm not implying I know *what* the catch is, it's just that I deeply know that deterministic interest rate bets are just as doomed to arbitrage as deterministic stock bets used to be. It's just a feeling that I'd like to express in plain figures but for now, I can't. Until then, think trading...

Well then most probably you don't (really) trade options, or else you would know there's a catch. But good luck with what you're doing!

And try explaining that to the hedge fund who only employs a single quant, that is me, and he isn't even recognised as a quant because everyone thinks this stuff is just some monkey typing in a formula.