options market making, seed capital

[1245]

a few years

Did you electronically send out your quotes? If yes, what platform did you use? I left the floor in early 2010 and I was using Actant. Also, what exchange were you a member of?

 

[mmt]

Yes, electronically sent. The platform was internally built by my employer. Liffe and eurex member.

Did you electronically send out your quotes? If yes, what platform did you use? I left the floor in early 2010 and I was using Actant. Also, what exchange were you a member of?

 

[bone]

Sure, FTRs, day ahead power, hourly power, heating days, cooling days, basis swaps options, freight options, tolling agreements, etc. Shit I could list a thousand of them as the combinations are endless, but you get the idea.

I agree with Mav completely. Just know that some of these products are not "day trades" and you will likely need to find a way to hedge them before your next look comes along. And the margin requirements for many physical products can be very beefy. Lots more to it than buying bids and selling offers for the most part.

 

[2rosy]

get relationships with brokers and make markets in clearport or ice products. power, natgas, coal, CSOs, manure. streaming quotes to an exchange might get you scraps if you're lucky

 

[bone]

get relationships with brokers and make markets in clearport or ice products. power, natgas, coal, CSOs, manure. streaming quotes to an exchange might get you scraps if you're lucky

I really can't think of a worse trading space for someone completely naïve about the actual products to just start quoting bids and offers. Especially to savvy OTC brokers who are looking to keep their best and longest tenured clients happy.

 

[Sancho]

Does anyone have any experience with Cutler? What is the leverage that they offer? How much capital do you need to put down?

 

[1245]

You really need to contact them. You can't assume they will take everyone. I spoke to them around 2010. Their minimum back then was around $150K. They keep around 16% of profits and your overhead will be high between Actant and exchange fees and their monthly overhead fee they charge. If you make markets in a lot of CBOE products it can get to around $10K a month, and your money is 1st loss.

Why anyone would want to make markets in equity options with 9 option exchanges, off floor brokers shopping the large orders, regulatory over-site and high fixed costs, I have no idea. It's a tough battle without directed order flow. I left the trading floor in 2010 because the vig is gone as a local MM.

1245

 

[Maverick74]

You really need to contact them. You can't assume they will take everyone. I spoke to them around 2010. Their minimum back then was around $150K. They keep around 16% of profits and your overhead will be high between Actant and exchange fees and their monthly overhead fee they charge. If you make markets in a lot of CBOE products it can get to around $10K a month, and your money is 1st loss.

Why anyone would want to make markets in equity options with 9 option exchanges, off floor brokers shopping the large orders, regulatory over-site and high fixed costs, I have no idea. It's a tough battle without directed order flow. I left the trading floor in 2010 because the vig is gone as a local MM.

1245

I know a professional retail firm that picks MM apart and tears them to pieces. Yeah the overhead makes no sense to me. Put up 150k and you have 120k a year in overhead. Need to double your money to break even. Sign me up!

 

[Sancho]

Given that is not a choice. Are there any props that will give you leverage for trading options? I looked up cassandra but their site is down.

 

[Maverick74]

Given that is not a choice. Are there any props that will give you leverage for trading options? I looked up cassandra but their site is down.

Most the JBO's left the business. The new regulations made it insanely expensive to run a JBO and the profits just aren't there.

FWIW, options on futures are given risk based margin that are similar to the haircuts you got in a JBO.