PropFirm for Options trading

[1245]

Some firms don't offer deals to non USA based persons. It limits your choices here.

 

[marsman]

Some firms don't offer deals to non USA based persons. It limits your choices here.

Yes, that's sad.

 

[marsman]

I'm looking for funding. If any firm or even a private investor is interessted, he/she can contact me via PM.
Such a cooperation would be very lucrative for both parties as 20+% per month is a very realistic figure.
I mean, I could with the help of my program trade a small account of him/her to prove the effectiveness of the trades the program finds.
I think that what I have is maybe the most sophisticated program for finding lucrative trades.
It can have any number of legs, currently limiting it to max 4 legs plus underlying, but mostly using only 1 or 2 legs, as these are easy to fill in the market.
I'm hereby not offering any commercial service, just looking for a funding and/or a fair cooperation.

Ok folks, you had a fair chance, but now the funding is secured, and I'm revoking my public offer.
If things go well as planned, then I'll soon (that's in about 6 months or so) have my own prop firm or investment bank.
Then some of you can try to apply for funds, or a job, or a b2b cooperation...
See ya later!

 

[JackRab]

And regarding MMs: one usually can't make any profitable trade with MMs, it's the other market participants with whom I, actually the pgm, try to make profitable trades.
Such profitable moments occur mostly intraday, very seldom when the options market is closed.
View attachment 164809

I don't understand what you mean by this. You plan to trade this against any other non-MM participant? So you'll try to beat the MM to the trade?
And how do you trade a profitable moment in options when the options market is closed??

 

[JackRab]

... and it is with very minimal or sometimes even with no risk at all (sometimes such spreads indeed occur).
I'll shortly post some trades based on yesterdays close prices for easy verification...

For example this simple 1-legger:
Underlying=EMES Spot=10.57 Exp=2016-07-15 Type=Call-Short K=15.50 L=0.30 B=0.15 A=0.45 Vol=2 OI=2
As can be seen, the credit would be at least 0.15, and that means about 12% profit in 3.5 weeks, using margin requirements of the broker IB.
The rationale for this trade is: S2K=47.48%...
View attachment 164809

How do you plan your risk management around this?

The implied vols in this are 120 for a reason.
This stock sat at $3 a month ago. It's a highly leveraged energy/oil play. When CL hits 55 this stock will double and the +12% return will be more like a -150% when your margin is 2.5x what you posted. And probably you need to post more margin to cover the trade or close it out.
And with absolutely shockers of spreads, you'll have a hard time closing out. Even hedging with the underlying will be a drama with the (ill-)liquidity of this stock.

The best possible hedge will be calls on CL... that might work but is far from perfect.

 

[deltastrike]

Ok folks, you had a fair chance, but now the funding is secured, and I'm revoking my public offer.
If things go well as planned, then I'll soon (that's in about 6 months or so) have my own prop firm or investment bank.
Then some of you can try to apply for funds, or a job, or a b2b cooperation...
See ya later!

Oh yeah? We'll male our own prop firm, with blackjack and hookers!

 

[marsman]

I don't understand what you mean by this. You plan to trade this against any other non-MM participant? So you'll try to beat the MM to the trade?
And how do you trade a profitable moment in options when the options market is closed??

??? Sorry, I don't understand your question as it does not make any sense with what I said. Maybe a misunderstanding?...

You seem to be a futures trader, maybe things there are different compared to normal stock and options markets, dunno as I myself have no experience yet with futures markets.

What I mean is this: there is/are MMs, and there is a single order book. If there are no other B/A offers, then usually (not always but mostly) the MM puts B/A offers into the book, with a wide spread...
Trading against these B/A offers is not much profitable. But if there is liquidity, ie. active volume, then it means that other mkt participants are giving their B/A offers, the spread tightens, and then more profitable trade possibilities occur...

 

[marsman]

Oh yeah? We'll male our own prop firm, with blackjack and hookers!

Sorry to disappoint you: no blackjack, and also no hookers...

 

[marsman]

How do you plan your risk management around this?

The implied vols in this are 120 for a reason.
This stock sat at $3 a month ago. It's a highly leveraged energy/oil play. When CL hits 55 this stock will double and the +12% return will be more like a -150% when your margin is 2.5x what you posted. And probably you need to post more margin to cover the trade or close it out.
And with absolutely shockers of spreads, you'll have a hard time closing out. Even hedging with the underlying will be a drama with the (ill-)liquidity of this stock.

The best possible hedge will be calls on CL... that might work but is far from perfect.

Hmm. I don't know where you got that "2.5x margin", as the margin requirements at IB are usually about 20% of the underlying spot per leg (depends highly on the option strategy, cf. their option margin table).

The underlying is far from being illiquid as its average volume is 818,469 shares/day,

From my side it's never indended to close early, instead when shorting then one better should let it expire.
Hedging has of course to be done if the trade turns against one. If one hedges with the underlying, then the position counts as "covered"...
One of course needs to have reserves for a possible hedging.

And: if you hold till expiration then volatility (HV, and also IV), liquidity, and B/A spreads don't play any role...

 

[JackRab]

??? Sorry, I don't understand your question as it does not make any sense with what I said. Maybe a misunderstanding?...

You seem to be a futures trader, maybe things there are different compared to normal stock and options markets, dunno as I myself have no experience yet with futures markets.

What I mean is this: there is/are MMs, and there is a single order book. If there are no other B/A offers, then usually (not always but mostly) the MM puts B/A offers into the book, with a wide spread...
Trading against these B/A offers is not much profitable. But if there is liquidity, ie. active volume, then it means that other mkt participants are giving their B/A offers, the spread tightens, and then more profitable trade possibilities occur...

I've been an options market maker for 10 years (index/single stocks/interest rate), so I know pretty well how the markets work...
MM's are active in any market. Their systems are pretty sophisticated, so most prices that fall outside their parameters will be traded through their algo's, especially when it's hegdeable. What you're aiming at, is beating them to trade these profitable prices... so you need to have an edge on them. Either by hedging differently, or by knowing more... or having a different risk parameter/appetite.