You say that the elimination of bullets is no big deal since there are other alternatives. Why aren't you also saying that those other alternatives (conversions) are very expensive (30-50 times so?) relative to bullets. Of course you could counter that the conversions are available to the trader over many days thus the cost on a pro-rata basis is comparable, but it severely limits the number of stocks and number of shares a trader can feasibly "put up". It also kills the traders ability to get short in any stock on the fly - and it takes a lot longer to put up a conversion. Or......am I missing something?
Well, to address conversions themselves....it is much cheaper to carry a conversion in the stocks you trade on a daily basis...(of course). Most Bright Traders don't get involved with "picking stocks" in preference to becoming experts in their "core" stocks. So conversions and other alternatives may prove to be preferable. Conversions are already "up"..and constant...and makes the trader "focus" "focus" "focus" on the correct stocks...vs. getting distracted by every movement of the wind. (Not "the" style, just " a" style that works very well. More later, as I said, after we get our people covered. Don
I think conversions would be included in the SEC letter since they are just another go around the spirit of the uptick rule. Notwithstanding that issue, I agree with Don that conversions on core stocks are far cheaper than buying bullets daily at 1.5 cents per share. Heck you could payup 25 cents on a 6 month conversion and be set for that time. You do give up the opportunity of trading other stocks since it takes time to putup the conversion. If you join one of the pro firms, the cost to put those up will be much less than bullets due to haircut relief. Again this boils down to the issue of conversions being part of the SEc interpretation. One way around this would be to just put out an exchange traded long term married put and scalp the short call once in a whle. This would probably bring you to a safe harbor since risk now exists. Another would be to put on a conversion with 2 deep ITM strikes.
It appears that my initial analysis,like that of some others, thought that conversions would also be banned. As it appears that conversions will be around,my suggestion of a final death blow to the equity trading crowd was wrong. I am glad,as I have many friends on that side. I was there for over 20 years,and just got tired of the bs involved, be it the sec/nasd and nyse making life more difficult for the intraday equity trader. I will say that upstairs trading of futures contracts is much easier from a rule perspective,and a much fairer trade overall. No specialists games,less bs that the equity side frankly. Having watched Bright Trading in action for many years, I am certain that they will survive and continue to prosper,as they do take the time to teach and mentor. They also have a good management structure,which will avoid the folly of restrucings and closed shops which have created minefields throughout the industry in the last few years. In the end , it all comes down to trading really,and my move from the equity side to the future side was simply a business decision.
Thanks for the nice words....it's always nice to hear positive statements (especially around here...LOL). Don
Hey, Mr Nonesense, or anyone else that wants to lend a hand: as someone who has spend the last 3 1/2 years at a prop firm trading exchange listed stocks, what would be your advice with regards to setting myslef up to trade futures. I mean in terms of what to read, where to go where they will train me, what a decent commision rate is, what futures contracts are best to start trading (e-minis?), anything at all you can tell me to put me on the right path. Also, what do u mean by "upstairs trading"? I have been very unhappy with the risk/reward ratio lately with nyse stocks, and though i am still making a living, im trying to kick it up a notch. I have become convinced that somewhere out there are markets where i will have a better shot at making some nice dough, but feel like a total newb trying to get into these other markets. I appreciate your help.