Best broker to trade short naked OTM futures options

Discussion in 'Options' started by Achill, Nov 24, 2010.

  1. chartman

    chartman

    People has to realize brokerages are in the business to execute trades for commissions. Period. They want traders that are buying/selling futures/options outright where the risk and turnover is higher. They do not want OTM spread traders where a position maybe held until expiration. Not enough revenue. In reality all buying/selling of outright futures/options are naked transactions unless it is a hedge account.
     
    #11     Jan 23, 2011
  2. Achill

    Achill

    #12     Jan 23, 2011
  3. Exactly.

    He took he best firm out of his equation, IB. If you want to avoid liquidations due to variation requirements, then don't sell naked. or trade less leverage.
     
    #13     Jan 23, 2011
  4. Achill

    Achill

    Even if you trade less leverage, even safe leverage, you can't be sure that under certain market conditions with some volatility spike your position wouldn't be autoliquidated when you least expect it.
     
    #14     Jan 23, 2011
  5. chartman

    chartman

    That is true with all naked futures and options including outright positions as well as spreads.
     
    #15     Jan 23, 2011
  6. Correct, there is no prophylaxis for stupidity. Say you're short ES puts into a 9/11 type tragedy. Write it off as a fuck-up and tell the clearing firm that you're sorry? I suggest you trade covered, or go with RJO, but you will pay through the ass.
     
    #16     Jan 23, 2011
  7. yup.. i have never seen an explanation for this but ., I SEE NO liquidity for options on FUTURES. looks like the big boys only trade the FUTURES directly.
     
    #17     Jan 26, 2011