Options Trading at Prop Firms?

Generally no LLC likes naked option traders.We would allow some naked option writing if a trader has 75K+ in capital and he is an active stock trader who knows the risks associated with naked option writing. The risk vs reward for the firm is not there . If you want to put on Long Straddle positions (pay for your options in cash), we would work with you.

We have some traders who trade stock around straddles with
"mixed" results. Many traders who trade options, trade options because they do no have enough money to trade stock. At our firm to use the ISE auto-ex and trade option strategies, 50K minimum is required. As Don mentioned, there is no "edge" trading options upstairs unless you have very low commission rates and you are a very sophisticated trader. Trade stock and use options as a hedge.



Gene Weissman
Lieber & Weissman Sec., L.L.C.
gweissman@stocktrade.net
 
Originally posted by GATrader
I am curious to know why they won't allow electronic entry. I think only Broker dealers can allow elec access not pro firms. Anyone care to shed a light as to why only non-pros can . Hmm... just 'dumb money ?...
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Prior to the ISE, broker dealer and away market maker orders had to be executed through a broker (the exchanges did not allow them to use the electronic system).

I believe that this is still the case on the AMEX and CBOE (though somebody can correct this if necessary).

The P-Coast and the Philly have some type of limited program which allows broker dealers to use the automated system for certain option contracts. Of course the ISE is automated so everybody uses the electronic system.
 
Originally posted by Gene Weissman
Don Bright,

I agree with you on that 100%! There is really no edge in option trading off floor unless you are using options as a hedge(Conversion, etc.). Word to the wise, trade stocks and use options as a hedge to get the edge!


Gene Weissman
Lieber & Weissman Sec., L.L.C.
gweissman@stocktrade.net
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Gene,

There has do be some edge to options, you have seen some of our account statements.

Michael
 
metooxx,

I'm not referring to sophisticated traders like you with infrastructure, pricing models etc. The trader who attempts to trade options with no edge, has a big disadvantage . Many traders think options markets are "liquid" like stocks and they think they are always are going to get auto-ex fills. If you know the markets, it's a different story. For the average trader, options is a losing game most of the time.



Gene Weissman
Lieber & Weissman Sec., L.L.C.
gweissman@stocktrade.net
 
Originally posted by Gene Weissman
metooxx,

I'm not referring to sophisticated traders like you with infrastructure, pricing models etc. The trader who attampts to trade options with no edge, has a big disadvantage . Many traders think options markets are "liquid" like stocks and they think they are always are going to get auto-ex fills. If you know the markets, it's a different story. For the average trader, options is a losing game most of the time.



Gene Weissman
Lieber & Weissman Sec., L.L.C.
gweissman@stocktrade.net
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Just kidding, I agree with you; it is a sucker game for amateurs ...
 
" For the average trader, options is a losing game most of the time."

Are you referring to buyers or sellers of options?
 
just21,

you said:


" For the average trader, options is a losing game most of the time."

Are you referring to buyers or sellers of options?

Actually both. Even covered writes , which sound like they are a low risk strategy , really are not. Covered Writes are mathematically the same as selling puts. Selling naked options can be profitable, especially puts if you want to own the stocks you sell puts in. However, like all option premium selling, this is not risk free.


Gene Weissman
Lieber & Weissman Sec., L.L.C.
gweissman@stocktrade.net
 
Gene....try as we might, some people just have to be proven wrong....but then again, we need two sides to make a market.

Options are great for the floor traders who can change the markets and take advantage of low costs and collect interest on short stock, etc.

I am personally very happy about options trading...."....options been very good to me..."

But not now...no real edge (except for the real experts, Hull et al.)..

Don
 
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