short strangles
- Thread starter larryb
- Start date
HD,
I would be happy to talk privately, but tell me how to do it. THis is my first day at Elite and the first time I've ever entered a chat room (talk about inexperienced!...) There was somebody else interested in margin as part of the thread, but I defer to you.
You can email me at keith.glanz@greentreetrading.com or call me anytime at 415 921 7300, or
you can continue on here.
Let me know.
Best,
Keith
PS I will just tell you there is very little downside to our non segregated account. Just let me know how you would like me to spill the details and I will.
I would be happy to talk privately, but tell me how to do it. THis is my first day at Elite and the first time I've ever entered a chat room (talk about inexperienced!...) There was somebody else interested in margin as part of the thread, but I defer to you.
You can email me at keith.glanz@greentreetrading.com or call me anytime at 415 921 7300, or
you can continue on here.
Let me know.
Best,
Keith
PS I will just tell you there is very little downside to our non segregated account. Just let me know how you would like me to spill the details and I will.
Larryb,
I will be happy to go over Risk based vs Reg T with you also. But I'm leaving my office now. So I'll pick it up tomorrow. Or you can email me at:
Keith.glanz@greentreetrading.com
best regards,
K89
I will be happy to go over Risk based vs Reg T with you also. But I'm leaving my office now. So I'll pick it up tomorrow. Or you can email me at:
Keith.glanz@greentreetrading.com
best regards,
K89
Keith, I have a question about mkt maker haircut. In order for a trader to avail himself of that privelege, he has to take his capital and pool it with other traders subject to blowup risk like harbor, business failure risk like Worldco, correct?
Is there another structure that threads a middle road that bridges the limitations of SIPC Reg T option margin and a JBO account subject to the above risks?
Thanks
Is there another structure that threads a middle road that bridges the limitations of SIPC Reg T option margin and a JBO account subject to the above risks?
Thanks
Gatrader,
For some reason (probably my own ignorance of how to work these forums ) I can not see the message you sent me. I get an email that you sent a response and when I click on the link I get some of the thread but not the latest messages. When I send this to you I will then be deposited in the right page to see your message.
Sorry, or HELP,
Keith
For some reason (probably my own ignorance of how to work these forums ) I can not see the message you sent me. I get an email that you sent a response and when I click on the link I get some of the thread but not the latest messages. When I send this to you I will then be deposited in the right page to see your message.
Sorry, or HELP,
Keith
Gatrader,
Now I know what you asked me....
Yes you are right. It is a pooled capital account. But that is where the similarities end. We have an independent firm that manages trader risk and firm risk in real time using a very sophisticated program (exactly the same one that Market maker clearing firms use. They have to manage the same kind of risk.) But it is actually much simpler than you think. Because haircut is not allowed to exceed 1 to 1 trader risk is never allowed to exceed capital given a 15% move. The advantages of basing margin on risk rather than cost are obvious. Real risk is always assessed. Also, the risk manager hedges the FIRMS risk by purchasing and selling options to offset risk when a group of traders is on one side of the market. The firm always maintains neutrality on a short term basis. Where a trader may lose all of his or her capital, he or she will never lose more than his or her capital, and never put the firm at risk.
Now I know what you asked me....
Yes you are right. It is a pooled capital account. But that is where the similarities end. We have an independent firm that manages trader risk and firm risk in real time using a very sophisticated program (exactly the same one that Market maker clearing firms use. They have to manage the same kind of risk.) But it is actually much simpler than you think. Because haircut is not allowed to exceed 1 to 1 trader risk is never allowed to exceed capital given a 15% move. The advantages of basing margin on risk rather than cost are obvious. Real risk is always assessed. Also, the risk manager hedges the FIRMS risk by purchasing and selling options to offset risk when a group of traders is on one side of the market. The firm always maintains neutrality on a short term basis. Where a trader may lose all of his or her capital, he or she will never lose more than his or her capital, and never put the firm at risk.
Keith,
Since others don't seem to mind, I'm happy to continue this discussion here. I have no secrets
As I've said, I really have very little knowledge of how prop firms work. So, if you don't mind, perhaps you could start by responding to a common perception of prop firms generally (at least as held by myself). That is, my understanding had been that prop firms were geared mostly to high-volume daytraders, not position options traders like myself. Am I mistaken about that?
Second, it would be helpful if you could explain using concrete numbers how risk-based margin would work for, say, the iron condor I described earlier (490/500/540/550) and for a one-sided credit spread. Also, perhaps you could give me a ballpark idea, if you can't tell me exact numbers at this point without knowing more about my particular situation, what kind of commisions and other fees would be involved.
That would be a good start. If attractive, I'm sure I may have a few follow-up logistical-oriented questions for you. Also, any follow-up by those among us who may have more insight into this (which likely includes everyone) would be welcome. Again, please excuse my ignorance. I just trade.
Regards,
HD
Since others don't seem to mind, I'm happy to continue this discussion here. I have no secrets
As I've said, I really have very little knowledge of how prop firms work. So, if you don't mind, perhaps you could start by responding to a common perception of prop firms generally (at least as held by myself). That is, my understanding had been that prop firms were geared mostly to high-volume daytraders, not position options traders like myself. Am I mistaken about that?
Second, it would be helpful if you could explain using concrete numbers how risk-based margin would work for, say, the iron condor I described earlier (490/500/540/550) and for a one-sided credit spread. Also, perhaps you could give me a ballpark idea, if you can't tell me exact numbers at this point without knowing more about my particular situation, what kind of commisions and other fees would be involved.
That would be a good start. If attractive, I'm sure I may have a few follow-up logistical-oriented questions for you. Also, any follow-up by those among us who may have more insight into this (which likely includes everyone) would be welcome. Again, please excuse my ignorance. I just trade.
Regards,
HD
HD,
I can not speak for other firms. Every firm has a different approach. You are right that most prop firms tend to be equity only day trading shops. GreenTree is somewhat unique in that we specialize in the experienced trader who wants to trade multiple products (stocks, options, futures, currencies) through one platform. We especially cater to traders who trade stock and options in a profitable risk controlled manner. Of course we would like a trader to be active, but we care more about a trader being profitable. And to that degree, if we can add value added services such as excellent education, an options hedging tool known as Risk Compass ( the best real time options hedging tool and option spreading tool I've ever see...I kid you not!) and a community of experienced option traders to chat with, all the better.
In answer to your margin question for theXEO Nov 490/500/540/550 iron albatross I ran that through our system to get your answer. Keep in mind that we used today's prices which was $3.70 credit not the $4.50 you managed to get by legging, and we used an 18 Vol. If you did that spread 10 times (40 contracts total) your capital required (haircut) would be right around $2400.
Remember the way we figure this is to look up 15% and Down 15% and see where your maximum loss is and what that number is. That's the amount required.
On the Put spread leg the haircut would be about $2900 if you did the spread ten times.
This might seem counterintuitive in that half the position costs more to hold than the all 4 legs. But we are doing the same 15% up and down scan for max loss and because you don't have the credit of the other side of the albatross to offset losses, your haircut is slightly higher.
Best,
Keith
I can not speak for other firms. Every firm has a different approach. You are right that most prop firms tend to be equity only day trading shops. GreenTree is somewhat unique in that we specialize in the experienced trader who wants to trade multiple products (stocks, options, futures, currencies) through one platform. We especially cater to traders who trade stock and options in a profitable risk controlled manner. Of course we would like a trader to be active, but we care more about a trader being profitable. And to that degree, if we can add value added services such as excellent education, an options hedging tool known as Risk Compass ( the best real time options hedging tool and option spreading tool I've ever see...I kid you not!) and a community of experienced option traders to chat with, all the better.
In answer to your margin question for theXEO Nov 490/500/540/550 iron albatross I ran that through our system to get your answer. Keep in mind that we used today's prices which was $3.70 credit not the $4.50 you managed to get by legging, and we used an 18 Vol. If you did that spread 10 times (40 contracts total) your capital required (haircut) would be right around $2400.
Remember the way we figure this is to look up 15% and Down 15% and see where your maximum loss is and what that number is. That's the amount required.
On the Put spread leg the haircut would be about $2900 if you did the spread ten times.
This might seem counterintuitive in that half the position costs more to hold than the all 4 legs. But we are doing the same 15% up and down scan for max loss and because you don't have the credit of the other side of the albatross to offset losses, your haircut is slightly higher.
Best,
Keith