I thought he would also have to be an introducing broker to skim the commissions to FCStone. He gave up his IB registration in 2012 according to nfa website. Were their any disclosures that he was sharing in the commission revenue in any way? That commission is way out of line with even broker assist retail. Perhaps that's why FCStone kept the positions open, may not have been the first time they bailed him out. https://www.nfa.futures.org/basicnet/SearchResults.aspx?type=firm&firm=OPTIONSELLERS.COM
No more turkey here, we scarfed the remainders over the weekend. I may still be feeling the effects of a tryptophan overload. (But if that were true, why do I feel wired?)
It was per contract round trip. There were no management fees, but he reduced the $69 fee if you had more money in your account (reductions at the $1M and $10M levels), I believe - but I don't have those rates handy.
*choke* He should have stuck with discretionary trading futures at that fee schedule. And he might have survived.
Wow, This works out more than 2/20 hedge fund structure. For diversification reasons he will be selling teeny options on NG, Coffee, CL,Wheat, Gold, Bonds, Indices etc. He is also time diversifying in his approach, so selling teenies on 2,4, 6 months out. Assuming 10 contracts in 10 asset classes in 3 different month time frame is 300 contracts. Almost 20k/month. Even assuming 1 million account size, that is 25% fee
Yeah but that $69 would include what he would have to pay FC Stone. Assuming he places all of his trades broker-assisted which would incur the most expensive commissions. TD Ameritrade charges $45 for broker-assisted trades for stocks, assume they charge the same thing for options on futures. So that would leave him (69 - 45) = $ 24 X 300 contracts that would be 7.5K per month, for 12 months, that's $90K per year, commissions/fees pocketed by him. So that article was right. That would be his annual fee, not in management fee but in pocketed commissions. Now that's what he charges for any account sizes below $1 million. So let's say the account size is $500K, 90K/500K = 18% fee. So he has to make basically 43% return in order to give his clients 25% return net of fees according to this calculation.