Hi guys, A little background...I have been selling on futures for a few years now and have been living of that income the last 2 years. I am also managing two different accounts for two family members not taking any payment or profit sharing. Just doing it as a favor. The total 'assets under management' is over $1M and less then $10M. I am at a point now where I can depend on a 10%-30% return with the median being around 15%. My question is, should I start an incubator fund or something along those lines to have a clean audited record of my performance with the intention of trading "other people's money"? And if I go down this road is a hedge fund a better option or a CTA or CPO or anything else that you might suggest? or should I just cruise along and not 'complicate' my life, as many threads on here seem to indicate is what awaits those managing other people's money? Also, at a median of a 15% return should I even bother? From the articles I found on the net the top managers return well over 20% after fees. Sorry for the long post. Thank you.
The reason why I ask is that if you only trade options on ES, it possible to have better results from trading SPX because SPX is 100X and ES is 50X the index. You have to trade 2X ES for the same income with more commissions. I'm happy to discuss you plans if you'd like to chat. I have a few accounts running your strategy including CTAs, hedge funds and LLCs that are neither. Just send me your contact information directly to my email. Bob
What's your Sharpe Ratio? What's your annualised volatility target? Most CTA's have a vol target of around 15% - 25%, and a Sharpe Ratio after fees of less than 1.0 (for those with a long consistent history of returns). However this is for outright futures trading, not options. An options strategy, assuming a short bias, would be expected to have a higher SR, and lower vol. GAT
Bob, Have you or your company authored a White Paper about this topic? Much like the one you had for JBO vs PM. I think it is a great jumping off point for your client conversations. For me, it not so much as running an incubator or correct structure though all that info is much appreciated. But, more on running a general strategy through a specific venue. Thanks.
We have not because as a firm, we want to avoid recommending a strategy. We simply want to accommodate our clients within the perameters set by the clearing firm, and the risk that we are comfortable with. Also, selling options is very capital intensive. Eg, most CTAs use between 0% and 25% of their margin overnight. The CTA if been raising money for uses between 25% and 80%. For SPX sellers, that is typical too. Bob
rmorse, Just sent you an email. globalarbtrader, I have no idea. That is why I wanted to use an 'incubator fund' and trade my own money for a year or two and have it audited and hire whoever needs to be hired to get all the necessary metrics in place. But the question is, should I go down that road or just trade my accounts and 'lead the quiet life'. On one hand I want to see if I can 'make it' but from reading all the accounts of people on here seems like trading other people's monye is more heartache than it is worth. (?)