Is there anyway to get access to European style options? Specifically looking to get the premium credited to my account right away and no chance of early exercise
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european style options
- Thread starter Took2Summit
- Start date
Its not too much of an issue, I'm mainly looking for the premium up front, free leverage. If in a perfect world options are priced fairly, then you could sell premium and invest the premium in a risk free return? That isn't exactly my plan but just wondering if European style options price in the fact that the premium is paid up front
Your broker requires less margin than the premium?
Quote from Took2Summit:
Not sure I understand the question exactly, but my broker does not charge me margin interest at all when I sell puts, does that answer what you were asking?
No, it's about capital being tied up. I've only ever done one credit spread, all debit spreads since, but I seem to recall I got about $150 credit but the margin was $300. So in order to get the credit, double my funds were tied up, with no interest paid by the broker.
If I wanted to make interest on that, I would be better off just channeling my money to a foreign currency account and collecting interest at that rate. I'm looking at it from the perspective that risking the margin to collect interest on the premium is not attractive.
BTW, I don't live in the States and I'm not a Yank so I get to do all this stuff, not sure if everybody else could.
Quote from justrading:
No, it's about capital being tied up. I've only ever done one credit spread, all debit spreads since, but I seem to recall I got about $150 credit but the margin was $300. So in order to get the credit, double my funds were tied up, with no interest paid by the broker.
If I wanted to make interest on that, I would be better off just channeling my money to a foreign currency account and collecting interest at that rate. I'm looking at it from the perspective that risking the margin to collect interest on the premium is not attractive.
BTW, I don't live in the States and I'm not a Yank so I get to do all this stuff, not sure if everybody else could.
Ahh got what you're saying now, no my broker does require margin. But for example if I have 100k account I will have the 100k working for me in trades, then on top of that take 50k of margin to sell very conservative puts, then use the put premium to my liking. Basically I know this brings my risk profile over 100%, but it let's me do it for free without paying margin interest.FYI my goal is 20-25% a year, so not swinging for the fences on this money.
Edit. I know theres other ways to bring risk profiles over 100% without paying margin interest but this is what makes most sense to me and fits my style, I have a very specific plan I'm looking to incorporate next year to see how it works.
Quote from Took2Summit:
Ahh got what you're saying now, no my broker does require margin. But for example if I have 100k account I will have the 100k working for me in trades, then on top of that take 50k of margin to sell very conservative puts, then use the put premium to my liking. Basically I know this brings my risk profile over 100%, but it let's me do it for free without paying margin interest.FYI my goal is 20-25% a year, so not swinging for the fences on this money.
I was going to go into why ESOs are "cheaper" but wtf?
Quote from drownpruf:
I was going to go into why ESOs are "cheaper" but wtf?
I am adding 50k a year to account roughly, I'm using the puts and the premium invested essentially as a free cash advance. If I get assigned the puts I pay down the premium. I know its nothing too exciting but ive done a lot of work on here over the 3 years ive been here and I believe doing this can get me my 20-25% a year with less risk then I was taking before. I dont have your knowledge of trading so I'm just trying to find something that works for me. Every time you start a journal I do my best to follow and understand but I get lost very quickly as you start talking "the lyngo".
Quote from drownpruf:
I was going to go into why ESOs are "cheaper" but wtf?
Also I understand you pretty much disagree with everything I do, but since ive been at elite trader in 2011 ive gotten 100% total return in just less then 3 years, which is more then I could have hoped for. Just trying to expand what I'm doing and see if I can do better.