Is this a good rate?

Discussion in 'Prop Firms' started by volatilitypimp, Jul 21, 2006.

  1. Traders keep 100% payout profits after fees.

    monthly option execution $0.50 per contract. volume based rebate starts @ 50k contracts.

    Equity execution(all-in)
    0-1MM $0.005 / share
    1-5MM $0.004
    >5MM $0.003

    20-1 equity leverage 5-1 option lev.

    Traders charged .0025 for capital used overnight over and above their existing capital.

    For example. I have 10K on deposit and hold a $30K position for 30 days. How much in dollars will I be paying for 20K for the month? Can someone walk me through the calculation? My math isn't adding up right.

    I will also have a small monthly desk fee($163). Is this a competitive overall rate? I trade mostly options and this company (LLC) which will remain nameless, specializes in options, which I need.

    TIA
     
  2. C'mon, over 100 views and nothing?

    I=Pxrxt

    So, 20,000 x .0025 = $50 per night, lets say I hold for 30 days. Am I to pay $1,500 per month? That comes to 18K for 12 months, 90% Vig!

    This can't be right, can it? That seems like a hell of a lot of viggorish to me.
     
  3. Can someone help me please? Am I going to be paying $2.50(two dollars and fifty cents) per $1,000(one thousand), each overnight session?
    :( :confused: :(
     
  4. Pretty decent. You could get a little better with that volume, but it's not bad at all.
     
  5. Aok

    Aok

    What up Vigorish Pimp?

    Get them to .004 and the first million.

    Jack up your leverage to 30-1

    And waive your desk fee with size on your part, and its not bad. Fight for every .001

     
  6. More specifically, I do 1-2 mil a month and have on average somewhere around .0035 all-in, and can get as much leverage as I need, so your deal could be improved. But since it's a firm you have no previous relationship with, you could probably sit with what you have until you prove you're not a risky trader.
     
  7. Thanks for the responses guys! However, I don't trade much stock. Some of the only way I trade stock is if I'm flipping against long gammas, synthetic straddles, etc.

    I realize they charge what interactive brokers charge .005, I am more interested in additional option leverage.

    They also said they would waive the desk fee, plus no front end fee since I'm trading remote, which I think is pretty sweet.

    The big expense I'm worried about is the vig. My strategy is such that I like to hold many positions for 30 days or so. Perhaps .0025 interest on overnight leveraged funds is normal, I don't know.

    Let's say I write an iron condor on $XEO. It costs me 40K in margin for the month and I have 10K of my own capital in the position. So it costs me 30K x .0025 = $75/day x 30 days= $2,250. Let's also assume I earn $1 per spread so I make 10K at the end of the month.

    So, instead of 10K/40K=25% return it comes to 10K-2,250 or $7,750/40K=~19% return (barring no adjustments less any commission). Hmmm...If I get paid 100% payout, this doesn't sound too bad I guess.
     
  8. Name of the firm? You can PM me if you'd like. Just interested in knowing as I'm still trying to gather as many firms for options trading as I can before I do an update to my list.
     
  9. Aok

    Aok

    pm Riskarb if he's still around. He seems to know quite a bit about options and could probably direct you to some firms. Or Maverick74. He's got his finger in alot of pies. I dont trade options aside from the crude hedge so I cant speak too intelligently on that.

     
  10. Aok

    Aok

    Kudos on your list JM.

    Good luck

     
    #10     Jul 22, 2006