Pattern Daytrading Poll (Continued)

[limitdown]

Quote from dis:

PDT rules drain liquidity from the market.

for those for whom it benefits, its a great rule, what with Reg T now allowing 4:1 trading margin....

for those for whom it prevents from trading the markets and participating, we all suffer from the lack of liquidity that used to exist. its actually noticable and significant...

for those for whom think it applies to trading Stock Options, they should leave that brokerage, no matter how good their commission structure is, and go to one that does not interpret the ruling in such a manner. In the absence of clear and precise deliniation of the PDT appling to Option trading, the SEC has worded the ruling in the broadest of terms, so that each firm can do the minimum interpretation and above with impunity....

 

[TM_Direct]

Quote from hii a_ooiioo_a:

And you persist in missing the original point that brought you into this whole discussion, which was that no matter how much money is in the damn account (forget about little ol' me, for the moment, this applies to everyone), at least it is the case at IB, if you (however much experience and net worth you may have) purchase enough options so that there remains less than $25,000 cash in the account after the options, that account . . .

oh, why do I bother

I don't know....get some $$$$$$ and you won't have this problem and if you can't come up with 25k ....you should not be activily traidng options!!!......but I'll give you a little tidnit of info...check out Options express

 

[hii a_ooiioo_a]

No, pig-midget, that was the whole point I was trying to repeatedly make to you for two days straight: that having $25,000 or $250,000 or $2,500,000 doesn't matter, it's never enough when you trade options because they insist on deducting any moneys you spend on options from the account value.

p.s. I do not make presumptions about who or what you are and what you do or don't know or do or don't have, and I rather resent the fact that you constantly do these things to me. For all you know about me, I might have $10,000,000 in the bank or even in a brokerage account.

 

[def]

Quote from TM_Direct:



You are current in that assumption, but you keep missing my point which is that no sensible, and ethical ROP in the country would EVER approve you or ANYONE for active option trading without a minimum of 50-75k LIQ net worth....let alone 25k...

Are you trying to take a dig at IB? I'd venture a guess that we know a teeny bit more about options and managing their risks than you. Most firms may not be able to manage risk real time. IB does and can. Your opinion is fine but to say that we are not ethical because we don't require an account of 50K to trade options is complete BS.

Should someone be daytrading options with a low account size - no. However, if used properly - options can be a great tool to hedge. Even simply strategies like buy/write can enhance value. Take your logic a step further and I guess you should apply the same logic to futures, SSF, etc.

To paraphrase from your previous post -- we've got more ethics than you'll ever have.

 

[hii a_ooiioo_a]

I began trading options precisely because they seemed particularly suited to a small account, especially within the context of IB's commission schedule which is unbeaten by any other retail broker.

At IB you can buy a single contract at say $1.00, or even less, thus spending $101.00 for contract + commission. There is no margin involved. The absolute maximum a small account trader has risked in this example is $101. Absolute maximum loss $101.

I don't see why that is considered an inadvisable method for a small account trader. The idea of selling a stock short always seemed far more inadvisable, considering that if the stock goes up the potential for loss is theoretically nearly infinite. (Although it really isn't, because IB will auto-liquidate, which in general is a pretty good thing, although of course occasionally it isn't). The small options trader has limited his potential loss by avoiding using any margin. I don't see why that isn't the wiser approach. Except for the damned Time Decay of options. But it is precisely because of the Time Decay that options ideally should be held for as short a time as possible. In other words, if you can get in and out of the option in the same day with a profit of any amount, really that's the best way to handle options. So, with options daytrading is in fact what any small trader should really be aiming for.

And this was not a problem before October 15, 2002.

Well, ok, anyhow having said that a small account can in fact daytrade single options contracts at IB without the PDT restrictions, if it is a cash account, which I myself did open in November for this reason. A cash account like that is restricted in how much you can trade, in that you can only use the amount of cash within your account one time on any given day, because you need to wait for one-day settlement before the cash paid to you arrives in your account.

 

[TM_Direct]

Quote from def:



Are you trying to take a dig at IB? I'd venture a guess that we know a teeny bit more about options and managing their risks than you. Most firms may not be able to manage risk real time. IB does and can. Your opinion is fine but to say that we are not ethical because we don't require an account of 50K to trade options is complete BS.

Should someone be daytrading options with a low account size - no. However, if used properly - options can be a great tool to hedge. Even simply strategies like buy/write can enhance value. Take your logic a step further and I guess you should apply the same logic to futures, SSF, etc.

To paraphrase from your previous post -- we've got more ethics than you'll ever have.

Getting a little paranoid def????? How did I take a dig at IB? or your ethics??....Are you a ROP def? ever been a SROP or a CROP?


I am telling you from my perspective the standards I have used....I have also been to arbitration where we did everything right and had every document signed and disclosures made ect...and still lost big time. I never said options aren't a great tool...why would you make that comment? and my exact point to Hi was that if you don;t ave a sizeable account with liquid assets, you should not be 'trading' options...That does;t mean he can;t buy a call or a put, but to me if you heave less then 25k in an account you should not be buying and selling actively in a options account........and one last point....Hi was upset about the regulations on his option account, that is why I suggested options express because I heard from another trader that they don;t care what you do....if you are concerned with ethics, you should be happy I made that suggestion

 

[TM_Direct]

[
Well, ok, anyhow having said that a small account can in fact daytrade single options contracts at IB without the PDT restrictions, if it is a cash account, which I myself did open in November for this reason. A cash account like that is restricted in how much you can trade, in that you can only use the amount of cash within your account one time on any given day, because you need to wait for one-day settlement before the cash paid to you arrives in your account. [/B][/QUOTE]

Please don't take anything I say personally and i apologize if you feel i was making presumptions about your account size o liquid ability...I've been thru somehairy options moments in a prior life so I tend to error on the side of the regulators when in doubt.

 

[def]

Quote from TM_Direct:



Getting a little paranoid def????? How did I take a dig at IB? or your ethics??....Are you a ROP def? ever been a SROP or a CROP?

No I'm not paranoid, I was just addressing your comment "You are current in that assumption, but you keep missing my point which is that no sensible, and ethical ROP in the country would EVER approve you or ANYONE for active option trading without a minimum of 50-75k LIQ net worth....let alone 25k...


I'm registered and have also been trading options since 1985. I know the rules and I understand the risks. At IB we auto-liquidate when there is a margin violation which protects the customer as well as the firm. If a firm has to manually deal with margin issues, that is another story. I'm not going to state what the min net worth or net liq requirements are at IB to gain permission to trade options but, I think (actually know) that we are sensible and ethical.

 

[TM_Direct]

Quote from def:




No I'm not paranoid, I was just addressing your comment "You are current in that assumption, but you keep missing my point which is that no sensible, and ethical ROP in the country would EVER approve you or ANYONE for active option trading without a minimum of 50-75k LIQ net worth....let alone 25k...


I'm registered and have also been trading options since 1985. I know the rules and I understand the risks. At IB we auto-liquidate when there is a margin violation which protects the customer as well as the firm. If a firm has to manually deal with margin issues, that is another story. I'm not going to state what the min net worth or net liq requirements are at IB to gain permission to trade options but, I think (actually know) that we are sensible and ethical.

You just proved my point!!!....what you are describing is 'risk management systems that PROTECT IB FIRST AND FOREMOST"

What I am talking about is the NASD " Know your customer and suitability rule"...which is designed to protect a client...If you are stating here that IB will let a client actively trade options ( 10 or more roundtrips per month) with STATED liquid worth of less then 25k and STATED net worth of less then 100k, then yes I will call IB on the carpet for ethics.....But I am willing to guess that you do require higher stated financial....otherwise, Every stock Jockey Attorney on the east coast is going to start running commercials during the Riki lake show asking people "have you ever traded options at IB"?....also. please do not insult me with your "auto liquidate" to protect the customers.....You know and I know that that is in place to protect IB...especially considering that you cannot margin options so im not sure how your auto matic system protects their margin accounts...the options should be fully paid for every time, unless you are letting them use a equity margin account for leverage to buy options.

 

[def]

Quote from TM_Direct:



You just proved my point!!!....what you are describing is 'risk management systems that PROTECT IB FIRST AND FOREMOST"

also. please do not insult me with your "auto liquidate" to protect the customers.....You know and I know that that is in place to protect IB...especially considering that you cannot margin options so im not sure how your auto matic system protects their margin accounts...the options should be fully paid for every time, unless you are letting them use a equity margin account for leverage to buy options.

I don't think I proved your point. Nevertheless,

1. Auto-liq - It absolutely protects IB. We never stated otherwise. However, the nature of the auto-liq and not taking margin calls protects all customers. A number of firms have been blown out by a rogue trader or lack margin collection. This procedure provides a great deal of comfort to many of our clients and particular those with multi-million $ sums.

2. Margin: I am talking equity margin accounts. So yes, they are and should be marginable. (naturally, I'm not talking long options)

Your main point - client suitability. Let me ask you this question. Why can someone go to a futures firm put down as little as $500 margin for an e-mini and trade to their hearts content when they can't do the same for equities or options? There is no way you're going to convince me that equity trading is more risky than futures. Taken a step further, if used properly (a broker can even control what strategies are made available) options reduce risk as opposed to increase it. Ofcourse a newbie may not use them properly but then again, the same people were buying into the internet frenzy with considerable margin. Sure would have been nice to buy a few puts along the way.

I guess the point I'm trying to make is that a broker with a real time margining and backend credit control system should be the best judge of what limits and what one is allowed to trade.