Can anyone recomend a good broker that offers vanillas for forex? I can't seem to find a good one. If they have exotics, that would be nice too but I am primarily concerned with vanillas.
i think most options brokers will have option on globex. they should give u the same leverage as forex.
Are you sure that globex options are the same as vanillas? I must admit that since I have never traded forex options, I don't even know what, if any, exchange they are traded on. I have traded CME futures options but I trade pit contracts because the globex contracts have very poor liquidity. These are not the same as spot options though because the underlying are the futures and do not have the same characteristics as forex.
There are a few retail fx option brokers. Ikon and Saxobank come to mind. UBS as Rosy mentioned; but they require $500k and don't accept US residents. Saxo is a complete joke. I don't have any experience with Ikon's dealing app which has fixed expirations, unlike Saxo's OTC. Both show 10pip markets in the options. Globex options are vanilla, but some of the spot pairs are inverted, such as the yen. Often there aren't any visible markets on Globex which requires the trader to RFQ for a quote and a model to price fairval if there aren't enough quotes to price the boxes. Globex haircut on ops is better than what is seen at Ikon and Saxo. www.saxobank.com www.alaronfx.com
riskarb, thanks very much. I was wondering why you thought SaxoBank is a joke? I was looking at them and trying their demo. They seemed ok and a friend of mine uses them but I don't think for options. Did you have a bad experience with them?
I used them for a couple of months before going to UBS. Their back office is terrible. Weekend margins double at 11am EST. Normally that wouldn't be an issue, but they don't margin options using any VaR or delta-method. They simply look at the notional size on any single option. A short straddle is margined as two independent positions. They liquidate your entire account at their market if you exceed the weekend call by >$100. Their risk-system is so poorly devised that I am amazed they have as much capital as has been reported.
Yeah thatâs not good. Itâs interesting that you mention their margin system because they advertise on their site that they do indeed have a delta and vega based margin system and that it is new. It seems to be in effect in the demo I am using, so I just wonder riskarb, how long ago you used them? Perhaps they do have a new system that was put into place after you left. Or are they just B.S.ing? Did they advertise the same thing when you signed up and then change the rules on you? Just curious. Iâll call them and see if they can give me any answers or if they just stutter and stammer. Itâd be a shame if they make false claims because I really am enjoying the demo and I like the platform. As per your suggestion riskarb, I am also demoing IKON. They are pretty good too but on the demo they only give you 30:1 margin. Also they have a separate spot and options platform which is a bit inconvenient but otherwise they seem ok. Unfortunately I donât have a big enough account to use UBS but one day perhapsâ¦..
I don't trade vanilla at the dealer-level. I clear listed vanilla on CME as needed. UBS was making 8-10 wide markets on the <30-day atm options.