New business ideas for options brokerage firms

[earth_imperator]

New business ideas for options brokerage firms

Brokerage firm gives its clients (ie. the traders) these important alternatives with any options trade:
- cash settlement (ie. underlying stock not involved at expiration)
- no early exercise (ie. using European Style)
for all listed US options.

Meaning: the brokerage does normal/usual trades with the exchanges,
but gives its clients these virtual choices between brokerage and client.

By this a dream would come true for all traders as most traders hate the American Style options with its early assignment / early exercise feature.

 

[zdreg]

Why don't you create a poll asking the question traders prefer European style exercise over American style options. answers yes , no or I don't care.

 

[JamesJ]

Pricing would be different... so a variable premium/discount would apply, making things very complicated...

Reasons: Dividends, afterhours moves on expiration, borrow costs on early assignment and more

 

[earth_imperator]

Pricing would be different... so a variable premium/discount would apply, making things very complicated...

Reasons: Dividends, afterhours moves on expiration, borrow costs on early assignment and more

But since this is a commercial business idea, it could be financed by some extra fees the traders who use it are willing to pay...

 

[earth_imperator]

Since some brokers offer "fractional shares" (which too isn't standard with exchanges), then the above said new features could be handled similarly by the brokerage firm... Ie. virtually decoupled from the exchange...

 

[BMK]

Wouldn't that kind of scheme be tantamount to the broker taking the other side of the trade?

And wouldn't that create a conflict of interest? LOL

My question is half serious. I'm pretty sure that the terms and conditions of most retail brokerage accounts explicitly disclose that the broker may, as principal for its own account, take the other side of any order you enter.

But the operative word is may.

If a broker offers a new product that is not offered anywhere else, then they are effectively creating a closed exchange for that product, where they must take the other side of virtually every order, at least in the early stages of rollout...

 

[mervyn]

There is no “fractional share”. It is based on security lending program against someone else’s book. The exchange would not execute less than 1 share of stocks.

Folks who don’t even have money to buy 1 share of stock post no systematic risk to the market.

 

[earth_imperator]

There is no “fractional share”. It is based on security lending program against someone else’s book. The exchange would not execute less than 1 share of stocks.

Folks who don’t even have money to buy 1 share of stock post no systematic risk to the market.

Read this on brokers with fractional shares:
https://www.investopedia.com/comparing-fractional-trading-offerings-at-online-brokers-4847173

 

[Sergio123]

By this a dream would come true for all traders as most traders hate the American Style options with its early assignment / early exercise feature.

Then they should use index options.

 

[destriero]

New business ideas for options brokerage firms

Brokerage firm gives its clients (ie. the traders) these important alternatives with any options trade:
- cash settlement (ie. underlying stock not involved at expiration)
- no early exercise (ie. using European Style)
for all listed US options.

Meaning: the brokerage does normal/usual trades with the exchanges,
but gives its clients these virtual choices between brokerage and client.

By this a dream would come true for all traders as most traders hate the American Style options with its early assignment / early exercise feature.

God you're a fucking idiot. Yeah, it's called OTC. Go get an ISDA you insufferable tw*t.

Don't short ITM. There are synthetic positions which will keep you from getting assigned.