Forward Conversions

A

AnonymousTrader

I got three questions. Please reply with accurate information.

1) Are Forward conversions legal for day traders (not just as an option strategy)? What does SEC have to say about it? Maybe someone can post a link to the SEC website on this matter.

2)Which pro firms are currently offering forward conversions?

I think I will need to utilize them, so something along those lines, to assist in my trading.

3)Are there any other creative ways? Also legality of them?


Thanks for the info!
 
Conversions themselves are legal. It is the use of them after you put them on that may create a regulatory liability. If you are using them to circumvent the short sale rule then you are guilty of manipulation and other wonderful things.

If your trading strategy is so dependent on needing conversions, quite frankly your longetivity as a professional trader is in question. A good trader can get short the natural way.
 
Quote from Discipline:

Conversions themselves are legal. It is the use of them after you put them on that may create a regulatory liability. If you are using them to circumvent the short sale rule then you are guilty of manipulation and other wonderful things.

If your trading strategy is so dependent on needing conversions, quite frankly your longetivity as a professional trader is in question. A good trader can get short the natural way.
More...

At least I got one aswer.

I perfectly understand the use of conversions as an options trading strategy. I was asking since so many firms are currently offering conversions and I became very skeptical on the viability of them. I personally do not and have not used "bullets" and other such devices - although I understand and appreciate its convenience. I do see that conversions can offer some advantages and was thinking about employing them in my future trading methods and systems.

So the question that follows, are those firms offering conversions violating the law? And if it is legal, why do they still do it, especially after the events of AB Watley, and other similar situations?
 
You must log in or register to reply here.
Back
Top