retail volatility trading

[vol_newbie]

I have been reading much material on volatility trading and I am wondering whether it is something suitable for a retail trader given the margins and costs (of delta hedging) it implies, or is it something only worth to institutions. Is there anything left for regular ETers? If so, what would be more appropriate:

1) Long/Short vega arbitrage
2) Skew steepening/flattening (either across strikes or expirations)
3) Dispersion trades (index vega vs constituent vega)

 

[1245]

You need a portfolio margin account. Yes, you can do all this in a customer account.

 

[xandman]

It's very commission intensive unless you use the gargantuan and and super liquid index products. Then, margin and capital is an issue.

Also, slippage is a painfully big expense. As a home gamer, I find myself fishing for a nice price all day. Even then, executions come at a nickel or probably much more to get a fill.

Nice chats at the water cooler, though.

 

[newwurldmn]

It's possible in a reg t account but you have to be very careful about how you run your positions and you can run as big and diverse as in a pm account.

 

[vol_newbie]

I was not asking whether it is feasible to operate like that with a retail trading account. I was asking whether it would be profitable enough to be an interesting trade for a retail trader, given the volume and fees structure presented to that kind of trader

 

[xandman]

PM or Futures options.

Newwurldmn can probably volatility trade your kids allowance to some serious coin. But then, that is how he makes a living. He knows the edges.

 

[newwurldmn]

"Profitable enough" depends on your account size and risk tolerance.

The only advantage a hedgefund will have is on funding rates. Otherwise they pay higher commissions and wider bid ask to get size meaningful to them.

 

[newwurldmn]

Thanks for the compliment xandman

 

[Johno1]

"Profitable enough" depends on your account size and risk tolerance.

The only advantage a hedgefund will have is on funding rates. Otherwise they pay higher commissions and wider bid ask to get size meaningful to them.

It's always been "horses for courses" there is far more low hanging fruit available to the retail trader in other areas, often hiding in plain sight. Usually all it requires is an adjustment of risk management practices.
Chees John

 

[Brighton]

Nice chats at the water cooler, though.

I'm not sure what that means. You can brag about sophisticated volatility trades? Or as a "home gamer" you spend so much time looking for a decent entry that you're going crazy and talking to yourself at the kitchen sink?