Do prop shops have traders that only trade options?
- Thread starter AMT4SWA
- Start date
Good eye. That was another Cassandra Group run by Dana Giacchetto who is currently in prison.
In terms of the Chicago options prop firm business model, it is primarily in market-making.
The market is very efficient, competition is fierce, and the bid/ask spreads are very tight. If you are making markets in exchange-traded electronic options markets and hedging your delta risk on NYSE or NASDAQ, you are eating at McDonald's for the most part. After expenses, slippage, and the finance carry on the book there is just nothing much left.
There is alot more meat on the bone in OTC options, but that is another discussion altogether because of the risk and capitalization requirements.
The market is very efficient, competition is fierce, and the bid/ask spreads are very tight. If you are making markets in exchange-traded electronic options markets and hedging your delta risk on NYSE or NASDAQ, you are eating at McDonald's for the most part. After expenses, slippage, and the finance carry on the book there is just nothing much left.
There is alot more meat on the bone in OTC options, but that is another discussion altogether because of the risk and capitalization requirements.
figured. Id be weary of taking a tainted name. (unless of course this is the original and the scammer copied)Quote from Maverick74:
Good eye. That was another Cassandra Group run by Dana Giacchetto who is currently in prison.
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What type of trading do any of these shops do? It would seem that day trading options isn't very profitable due to bid/ask spreads and commissions. I would assume they would be using some sort of swing trading strategy.
Everything from market making to momentum trading. Some of the most lucrative traders are actually daytrading options. Sometimes 5k to 20k contracts a day. On a good day these guys can pull down 100k. The irony is that momentum trading is probably easier with options then stock. Much more liquidity.