I am considering prop firm - T3 trading - they said for options trading they will have offer portfolio margin but not sure how will it work ? They want 25k risk capital - so portfolio margin they will provide based on my initial risk capital ? And may be a stupid question but do I have to pay interest when I have portfolio margin account? if yes generally what is the rate generally prop. firm charge to their traders? Also please advise all cons of trading with prop firm. Only reason of course I would go this route because now I can scale up my trading so can use increased buying power for my options trading.
The business model of these types of places isn’t dependent on you succeeding. Which is unfortunate. The game changes but it’s mostly going to be ways to charge fees in as many ways as possible. As first loss capital you’re not really changing your downside so you can’t really scale the upside.
Ok so what are other options if any if I want to increase my BP or in other words scale up my trading ?
I’d have to ask way too many questions to point you in the right direction. Avoiding wrong direction is easier. As a general rule though (not knowing your age) if the goal is to make money then you should focus on skill and connection acquisition first. Until at least 100k is saved. Then start to get some contacts with people in the trading industry to get a regular paying trading related job and then go from there. Full time trading you need to be bringing in at least $1m a year to offset risk and other opportunity costs. Of that $$$ expect to take home 20-30% ish. Before taxes. Back in 2010 I had a bank give me $1B risk with $0 on deposit. If the current environment had magic like that again I’d have different advice. But I’m just not seeing that anywhere now. Even in crypto.
Prop firms do not offer "Customer Portfolio Margin" within their Firm, which is a BD, with $25,000. What it sounds like is that they will allow you to trade with the option privileges and stock offsets. You need to ask for details as this is 100% up to them what they allow for day trading and overnight. In your trading, what is your strategy where you get a benefit of using a Prop firm? Is your equity below $25,000? Do you need higher option levels than you can get on your own? Are you looking to hedge stock with options and do not have the capital to do that on your own? If you are an option buyer for directional trading, and you post $25,000, I would ask if they will really allow you to buy options at a dollar value higher than your CASH you deposit. Maybe you should get more details from them before joining.
My equity is higher than 25k and I am mostly doing overnight options trading in stocks - yes they will let me trade options with 25k but if its less than that they will only allow stock trading either day or overnight - overnight 8x and day - 20x I am not options buyer - am seller and more times than not - its naked options (strangle) - I dont need higher level. I want to scale up what I am doing. Yes I am asking questions to them but wanted a 3rd party experienced people's opinion. I researched a bit and found that I do have to pay interest to them if I am using any type of margin - either reg t or PM
I find it very hard to believe that T3 or any Prop firm or broker, would allow you to buy up to $400,000 for Overnight or $1mm for Day Trading of option premium if you deposit $50,000. And no, you can't do close to that in a PMA. I suggest you provide same a sample of day trading and overnight positions and get that approved from their Risk.
no 8x and 20x is for equity/stock trading (not the options trading) and For options he said - we usually start by providing a small premium to portfolio margin. (I am not sure what it means so I have asked him to clarify)
I assume you have never joined a Prop firm in the past. It is not like opening a customer account. You need to register with them, pass the required FINRA exams, sign a contract and then have your funds locked up for 1 year. Option trading with a BD is very expensive compared to a customer account. The Option exchange fees are much higher, and you lose customer priority on the option exchanges. You will need to pay pro-market data fees, get their permission to open outside accounts and conduct any business outside their firm. IMO, Prop firms work better for equity traders that can't get leverage on their own or need access to technology they can't get on their own. For an Option trader, using a prop firm that promotes Market Making makes sense now too, as no Clearing broker wants small MM accounts anymore.
Just for my knowledge what is BD full form? Yes never joined a prop firm but as I said - want to scale up so need more margin/BP - For options trading - only few Prop firms I know that allow options trading -- ...T3/ maverick, tradefundrr, great point and itpm - You said use prop firm that promotes Market making - so how do I know which of the above promotes that? is there any way to research? Also if you know any firm that I mentioned above - pls share - and give me your opinion which one is the best among above?