I am wondering if anyone here has experience with getting approval to trade future options? I am hearing TastyWorks is the easiest since the owner has trading experience and knows how to mange their risk. However, their margin rates are pretty expensive. I am mainly interested in InteractiveBrokers but unsure on their requirements. I tried TD Ameritrade and they won't let you buy call/puts on futures unless you reach the highest tier approval. This seems quite nonsensical considering there is 0 risk to the broker if the trader just buys calls/put and does no selling. Is this the industry standard for future options or Am I missing something? If anyone got approval on future options on IB and know what got it, please share
We have the same requirements for futures and options on futures. $25,000 account and a minimum income, liquating equity, and net worth. If you want to call me or email me those numbers, I can give you an idea if you meet those requirements. We clear at Wedbush futures and use CQG QTrader or Desktop for options.
Neither of these are brokers I would trade futures on. Their clearing process is questionable. I view TastyWorks as a glorified bucket shop. They take almost anyone and allow people to trade incredibly risky assets with zero experience. It's a commission and margin play because they know most of their clientele arent sophisticated enough to understand the total cost on a trade. Most good futures brokers require 25,000 or more to get looked at. The risk to the broker is you getting exercised on. The one cent rule is in effect, meaning if you are one penny ITM the broker will exercise your long option for you. Most brokers require you to call for each individual trade and specifically place a standing "do not exercise" order. As a result, brokers require capital requirements commensurate to the risk of you suddenly coming under margin on a very expensive asset. FWIW I am approved for futures on IB and at the max level at TDA. It seemed to not matter much how much I brought to the table (I only have around $10k risk capital to play with) but my income played a role. I have an extremely low debt to income ratio and a very high income and net worth relative to my age. It made getting approved very easy. I don't trade futures or futures options right now. At the advice of some very smart people on this forum, I'm sticking to options until I can grind my account up to a point I can get approved at a real futures broker.
If you could be so kind to PM me the minimum income, liquating equity, and net worth, it would save us both some time. $25k minimum deposit isn't an issue.
Interesting, thanks for the insights on the approval. I am curious which broker would you consider a "real futures broker"?
I can't do that. We don't want traders plugging numbers just above the requirement. I won't post it without permission from compliance. If you call me in the next 10 min, happy to discuss.
Any broker that knows how to price futures margin correctly. I've had nothing but trouble trying to get relief on calendars and such the few times I attempted to trade them on TDA and IB. They force you to carry margin for both legs. Even something as simple as a TUT was priced in at full margin. I don't know any of them by name. Once again, I was advised to just stick to options until I get enough capital. Once I do, I'll probably go seek advice once again from people who know the market better than me.
I would not say "real" vs something else, but there are FCMs that focus on future and are not online brokers. We use Wedbush Futures. Here is a list. https://www.cftc.gov/MarketReports/financialfcmdata/index.htm
Information on Options on Futures through NinjaTrader Brokerage can be found here - https://ninjatrader.com/Options-on-Futures