margining multi-leg positions in stocks

endicottsteel · Mar 17, 2016

garachen said:
It's more than that. About $5M plus spending about 1m a year in commission.

Wow and awesome. Thanks for the knowledge.

destriero · Mar 17, 2016

endicottsteel said:
So from the replies here it looks like if I am correct if I want to trade 4 stocks against an etf, dollar neutral I will need a US prop firm like bright trading unless I have a very large account say $1m+ then I could probably make my own arrangement with some digging. If I need futures versus stocks I am likely to need $1m account and go digging again. Only the prop option is available to me at present.

There is no way to make it margin-efficient in a retail account, even with portfolio margin. Say you're short the ETF vs. the long synthetic basket. Neutral price and you're probably talking about variance on the order of $500-$600 per day, max, with PM. It's just not feasible.

You would need to be trading a prop sub-account to effect it. No back-office at a BD is going to allow you to go on call. You would need to be at a place like Bright or Echo. Friesen at Bright probably sees this 10x a week. It's nothing for them.

endicottsteel · Mar 17, 2016

exacta

destriero said:
There is no way to make it margin-efficient in a retail account, even with portfolio margin. Say you're short the ETF vs. the long synthetic basket. Neutral price and you're probably talking about variance on the order of $500-$600 per day, max, with PM. It's just not feasible.

You would need to be trading a prop sub-account to effect it. No back-office at a BD is going to allow you to go on call. You would need to be at a place like Bright or Echo. Friesen at Bright probably sees this 10x a week. It's nothing for them.

exactamundo thanks for confirming. I am learning options so get ready for some trolling. cottle, baird & sinclair are getting a re-read.