I agree with the fact that the markets are tight most of the time...I never inferred otherwise....we always kept tight markets, otherwise we would not get enough public business. Good enough Don
Since Robert is only about 25 (or so, Robert??) I doubt that it was too long ago. Credit conversions are done all the time. Our firm alone does hundreds every month for our traders. We pay about 5 cents over FV to the traders and they love it. (Not trying to belabor the point. I'm just trying to share the facts about options trading with the board....that's all....) Don
whatever don, we are coming from two different angles, and Im failing to see how you are sharing anything beyond how happy your traders are
I am probably the first here to stand up and admit my inexperience in understanding things like paying the traders more than fair value for a conversion/3 leg conversion..etc "Credit conversions are done all the time. Our firm alone does hundreds every month for our traders. We pay about 5 cents over FV to the traders and they love it." 1) how can your firm pay more than fair value, or why would you? 2) do the traders collect interest from Bright Trading on the shortsell credit portion? 3) what would you hold (formula) as margin for a completely hedged position like that? 4) When I spoke to Cash at your firm he said you really discourage option trading and the commissions are somewhat prohibitive as well as order entry methods. Is that true only for truly speculative options trading or for hedging as well? Altho I am mostly an options trader, I am still considering Bright as possibly my first new prop/direct firm and I really want to understand your position as far as option trading before I "throw the baby out with the bath water" so to speak. Your time is greatly appreciated Don.
...some of us who mostly "lurk" do appreciate your explanations and comments...don't ever stop....(like you possibly would though..lol) and no I do not trade with Bright.........yet....... Good trading all.... mrktwiz
A. On the trading floor, traders will use the "3 way" valuation as a way to hedge themselves. Example: If I end up selling 200 calls at a good high price to the public, I can either buy other calls to hedge, or sell puts, or buy stock....to get "delta neutral"....and if I end up with too many "gammas" (short term term delta movement) I can compensate by completing a "3 way" to level out (again, just "locking in" profits from the call sales by being able to then turn around, buy the calls back, sell the puts and sell the stock at "FV"). B. We don't "trade" options (we don't feel the "need" to, and don't want to give up any edge to floor traders, and even they are having a hard time the last couple of years). We "buy conversions" to get long stock in our accounts without risk from upside or downside movement. We put the conversion on and leave it alone, and then trade the stock itself all day long. Easier to go short without "selling short." (We pay a few pennies over FV because the conversion is worth many, many times that abount to our traders. C. The overall conversion is just about "risk free." as I noted in "B"...so the margin is minimal. D. Regarding options trading, please feel free to call me directly to discuss. I think you'll find that what I say makes sense...we are interested in you making money, as I'm sure you are too. Don
Don, Why don't you just have them call you to discuss things that realate only to your business and how you run it? Some of us would rather not have a forum filled with you constantly hawking your firm. It is shameless self promotion, and highly unethical. Just post a link to your website, we get the message. It is one thing to discuss general topics of the markets and trading that apply to everyone, but quite another to use free forums to save you the cost of a 800 call from a prospective client. Have you no shame? Didn't think so.
I think i get you now, Bright as a firm will pay 5 cents over fair value to the floor traders/MM for essentially a risk free stock position for use as inventory for your proprietary stock traders (remote and in-office) to day trade all day long. it makes perfect sense. from the original post, it sounded like your remote and in-office traders were more than happy to sell to Bright at .05 over fair value. I was thinking, hey, maybe I can run to a Bright office right now and get set up to sell a few to Bright today! HA!
You need to chill. I asked him the questions, specifically about his firm, and the name of this thread is "Bright Trading"........... I appreciate the chance to call him personally if necessary. Thanks Don.