They likely take some portion of that fee and buy a cliquet option to hedge their credit exposure.
Which technology-solid brokers accept accounts with US$1mn
- Thread starter silveredge
- Start date
They likely take some portion of that fee and buy a cliquet option to hedge their credit exposure.
Possibly, although they're likely to hedge their whole book holistically not client by client (unless it's a really big client, not just measly 7 figures). Does the fee increase with the size of your exposure? Would be weird if it didn't or you would only scare off the relatively small clients.
Sigh, I haven't sold naked vol since I was a young and naive options market maker, and I certainly wouldn't do it now without hedging the tails.
GAT
re:no typo,
This is the usual English divided by language.
Originally, “whine” referred merely to the sound. ... Though Americans use only one word, “whine,” the British use both: “whining” covers a variety of meanings, including sounds made by people, animals, or inanimate objects, and “whingeing” (also spelled “whinging”) is more specifically for peevish or fretful complaining
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That’s what I meant. They charge everyone that is creating the exposure and buy one cliquet for the hedge.
It would be better for an individual to buy a hedge themselves (if they can do it at a reasonable price) otherwise they are just paying for someone else’s put.
I started my career as a market maker as well. I’m no longer young, But I might still be naive
Wow you are very lucky because just now some brokers are (next to move to $0 trades) also elimination their assignment/exercise fees...
if i think i should hedge the tail i will hedge, but i won't do a trade because my broker indirectly forces me to. If a broker expects me to adjust to him, he can suck my big fat cock
Do you trade under portfolio margining?
TD Ameritrade recently got rid of their exercise / assignment fees. They also have an API, but there are some restrictions to access it. Not sure what language it supports, probably Java as that is what their TOS is built on. Your last requirement about $1m account is just an exercise in showboating as name a broker who would reject a $1m account? It's not as big or as uncommon as you might be thinking. I have never seen a broker with an account size maximum. They will take as much money as you can give them and still ask for more.
I guess there are brokers out there who have an account size minimum. And that $1m wouldn't be enough to fulfill their minimum requirement.