From the relatively incoherent original response it sounds like they want the account to have enough money in it to cover the entire ES contract if your option ends up in the money.Oh wait a second, I think that 1 option would require full margin for non-US.
If you want to buy a $150 ES option I think that would be $4620 margin requirement.
Exaclty how do they calculate that risk...... It is physically impossible to lose $4620 buying a $150 option.
Been asked to move to another FCM
- Thread starter ryker
- Start date
Robert Morse
Sponsor
I have an update for everyone here. I have been in contact with ryker and got his permission to look into this. ryker was never asked to leave Wedbush. The Introducing Broker that was his broker on the account, was asked to leave, but never provided this information to him. Wedbush gave the IB 10 days to transfer their accounts to another FCM, another Broker at Wedbush or close them. It had nothing to do with this trading. It had to do with the IB relationship with the FCM.
Bob
Bob,
I have told you over email that this wasnt related... My move was prior to DDT switching over to IronBeam.
I'm happy to forward you the email from the risk manager if you want to investigate this further.
I want to point out is DDTs very long list of crazy requirements.
I got this e-mail from them. Left my head spinning.
I want to point out 2 things b4 you read this, first is the full margin requirements for non-US daytraders, second is the full day trade margin of the underlying future to trade 1 option contract.GL.
1) You would need to maintain the proper currency denomination for the Exchange you are planning to trade on.
If you plan to trade EUR contracts, then you will notice on the homepage of our website (when you look down the column that says "Clearing & Exchange") you will be charged in EUR & USD for any fees or losses. Which will require EUR & USD funds to be in your trading account to avoid any type of Debit balance between these currencies because your trading account can maintain these types of currencies. For funding, then you would need to wire your EUR funds directly to the Deutsche Bank in Frankfurt and thenthe Clearing Firm can convert any amount of your EUR funds into USD funds for a $25 Bank conversion fee at the Best real-time InterBank conversion rate possible. The EUR & USD sections will appear on your Daily statement, so you will need to monitor your EUR & USD balances to make sure they donot go Negative. Otherwise the Bank will charge you Interest penalty fees on your negative balance. Also, your total EUR & USD funds will get fully applied to your Margin requirements.
2) CQG usually has access to most Options. But we can always confirm with CQG once you feel comfortable with the rest of our Rules which might affect your final decision.
3) If you decide to trade Options, then please be aware that the Clearing Firm isnot too comfortable with Option Sellers as shown within the Disclosure of our "Trading Margins" link : http://deepdiscounttrading.com/TradingMargins.html
A. If you strictly "Sell Naked Options", then the Clearing Firm generally enforces 200% of the Futures Initial Margin per contract during the order placement & carrying process due to theilliquid nature of Options.
B. If you strictly trade "Option Spreads", then the Clearing Firm generally enforces 100% of the Futures Initial Margin per contract during the order placement & carrying process.
But our Risk Manager will need a one-time example of your Option Spread in advance in order to confirm the 100% margin requirement for you.
Your naked or spread margin amounts by the Exchange (SPAN) would appear on your Daily Statement Only, because the trading platforms / feeds do not have the intelligence to calculate margins / premiums for Options.
The Clearing Firm needs to be very conservative with "Option Sellers" due to the potential Risk.
But if you plan to maintain a Very Healthy account size and depending on your strategy, then xtra flexibility "might" be considered...
C. If you are strictly an "Option Buyer", then the Clearing Firm generally enforces 25% of the Futures Initial Margin (unless you are a Non-U.S. Trader) during the order placement process (no matter the cost of your premium).
Because technically speaking, if you allow a "Purchased" Option contract to expire "In The Money" (without closing your position).
Then by the next Open you will be assigned a Long Futures contract if you bought a Call Option or you will be assigned a Short Futures contract if you bought a Put Option.
The Clearing Firm can set your trading platform to only one of the three "Styles"mentioned above (not to all three Styles simultaneously).
Once your % Margin is set, then this % will also apply to your Futures contracts as well because the Feeds cannot distinguish between Futures contracts & Options contracts (which might eliminate most of your Futures margin flexibility).
D. If you are a Non-U.S. Trader, then the Clearing Firm enforces 100% of the full Initial Margins for Day Trading the Futures.
Initial Margins : http://www.deepdiscounttrading.com/TradingMargins.html
Trading Fees : http://www.deepdiscounttrading.com/index.html
Trading Platforms : http://www.deepdiscounttrading.com/TradingPlatforms.html
Safety of Your Money : http://www.deepdiscounttrading.com/TradingFirm.html
Account Minimum : http://deepdiscounttrading.com/TradingAccount.html
IF we should meet all of your needs & you feel comfortable with our Brokerage, then I will always be your Account Executive in the background to help you set up your trading account properly & make sure you are being serviced Fast & Efficiently."IF you are not 100% Happy with our Service, then I will Close Out your account instantly with no delays, hassles, or penalties". Please feel free to contact me anytime with any questions or concerns (days, nights, or weekends).
At least at the end he said he will close your account out with no hassles. Other than the requirements he seemed like he would be a good broker
I noticed within the DDT website that they reduced their day trading margins for "all" types of traders now. Span margins will apply for options. Also, USD funds will just be simply applied towards EUR contracts. I believe these changes were due to DDT's new clearing arrangement.
Thank you, totally agree with you. Maybe FCM conduct had something to do with ryker located in the Bahamas, the jurisdiction many service providers are not respect, as we learning on our war. Hope two years later ryker has solved it and had never again this type of treatment.