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Not sure what you are referring to when you say 5x margin when the topic is options. When we refer to leverage and equity positions it is simple math based on market value. With options, not so simple. In a PM accounts, the OCC shocks a portfolio based on their VOL skew and the max loss from...

Correct. I'm only comfortable saying this because the IRS has stated it in that link. "Investment income is not subject to self-employment tax" and if your choose Mark-to-Market Election, "Gains and losses from selling securities from being a trader are not subject to self-employment tax"...

That is correct but you don't pay self-employment tax on trading earning if you trade with or without an LLC or with or without MTM treatment.

Interesting, your profile says you are in NYC. Is this a futures account?

I started trading in 1985 professionally. Options selling was popular back then too.

None of our brokerage accounts pay interest on balances but we don't charge you either. I don't expect that anytime soon.

That holds true for every strategy. The problems now is that the clearing firms no longer see the risk reward from offering pure PM margin (or for an FCM, pure SPAN margin) to naked option sellers. They see a limited value in the commission dollars from this activity with the risk of a large...

No to the first questions. read this to see how to qualify. https://www.irs.gov/taxtopics/tc429.html There are pros and cons to switching to an entity and I won't list them all here. From the broker's point of view as you asked, some of the downsides are that: -you will incur the expense of...

You can't make those types of returns anymore because all brokers have risk parameters that make it very difficult. In 2012 yes. I had clients making 10% per month. Not likely anymore.

I was being general because there can always be a hybrid. What else have you found besides the types of prop firms that take trader's capital as first loss and the Susquehanna/Wolverine/Peak 6 etc model where they are funded by the partners and each trader is an employee and get an allocation of...

In a reg-T margin account with $30,000, you max day -trading buying power is 4X or $120,000. For over-night 2X or $60,000. However, any clearing firm can offer you less if they choose.

There are two types of prop firms, in general. True prop firms that allocate their capital toward a manager/trader and want a rate of return for their risk. Then the kind where your money is first loss and they make most of their money through charging fees like for training and commission. A...

Sorry, I take that back. We introduce to INTL FC Stone and I run a lot of reports, but I never tried to get a spread sheet of EOD equity and liquidating equity before. I was able to do that. I assume RJO can do that too. Bob

We don't do business with them but it would be typical to be able to run a report of transactions or cash movement. Running a report of daily market value or liquidating equity would not be a typical report. You should call you rep Monday morning to see if they can do that. Bob

You should know that a 30-50% split is not typical. Without a management fee, 25% on net profits would be more typical. Lower margin use allows them to use a master/sub-account structure and allocate to more managers with the same funds. Anything over 25% become difficult to manage that way as...

Do you trade options too? Do you only trade for your own account? Maybe a good way to grow and move forward would be to manage others money too.

IMO, stick with futures. You can look into other products in the futures markets. The natural leverage and tax advantage is to your benefit. Bob

That is not quite accurate. When interest rates are higher, in an institutional account, you can short stock and get paid on the cash balance. So when you buy a call, the natural hedge is to short stock delta neutral. So calls are higher if you can get paid for short stock. With interest rates...

SPX market makers hedge their positions with ES contracts because there is no SPX underlying and SPY is not efficient. So when their option skew is set in their platform, they use the futures that best corresponds to the month or week they are trading. Yes, they have to take into account that...

Put/call party creates an interesting dilemma when you have varied cost of long/short and high priced underlying. The difference between my long rate and your short rate can be substantial. It is likely because of that and market demand for put buyers, that the puts can trade higher than the...