"program trading" at home

Discussion in 'Trading' started by rs7, Jul 23, 2002.

  1. I'm not sure I understand the question, but if you're talking about "cross margining' positions (stocks vs. eminis), then the answer is doubtful as a customer. You would need full margin for both. Correlated baskets have been used for years on the floor, as you know, and a limited amount of offset is allowed.

    #11     Jul 23, 2002
  2. rs7


    Thanks for the response. I am impressed you seem to look at every thread..I guess not much gets past you:)

    I understand "doubtful as a customer"...what I meant was as a firm or prop trader, can I get what you call "cross margin" (a term I am not familiar with)? Or in terms I do understand, more simply, if I am in a riskless transaction, how is it treated as far as buying power required? Example: a conversion, or butterfly spread, etc....

    #12     Jul 23, 2002
  3. I can speak for our firm when I say that we offer "haircut relief" for hedged positions. This ranges from "zero haircut" to about 2 % per year for many times your equity. You can check our fees schedule on the website for the specifics.

    We simply take the dollar value of the your "longs" vs. your "shorts" - and consider that for haircut. This is easier than deciding whose "pair" or "hedge" is really a valid one or not.

    Hope this helps...


    PS: I simply leave ET open on my "extra" computer on my desk, and when it's a bit slower I keep myself occupied (even though it gets "painful" at times)...:)

    #13     Jul 23, 2002
  4. rs7


    I guess super-ego was right. I have a tiny little brain. I am not clear on this.
    Are you saying if I am long $X of MSFT and short =$ of INTC, I am hedged? And if so, how does it affect my buying power? Or does it?
    #14     Jul 23, 2002
  5. rs7


    I can only begin to imagine:) You have more self restraint than I could ever muster!! My hat is off to you!
    #15     Jul 23, 2002
  6. rs7, that only affects how much you can take home vs your equity.
    The firm is prepared to let you carry more overnight if they consider you "hedged" - which by their definition is equal $ longs vs shorts.

    I don't think this has anything to do with your question though. Maybe you and Don have different meanings for the word "haircut".

    rs7, given Don's answer, I gather the firm doesn't consider that anything can be a "riskless" position.
    #16     Jul 23, 2002
  7. Since when has a butterfly spread been a riskless position? Limited risk yes, but riskless? Maybe I've understood it wrong..

    Anyway, you wouldn't be able to put one on, since there isn't a prop firm I know of that allows option trading.
    #17     Jul 23, 2002
  8. rs7


    I guess...I always thought of "haircut" as what the exchange considered to be the real time risk on a given position.

    I doubt this....riskless is riskless. Don?
    #18     Jul 23, 2002
  9. As far as "buying power" goes, intraday there is no 'hard limit" per se'....it is based again on risk, and a "hedged position" obviously would be treated more favorably than a "naked" long or short.

    Feel free to call me if you like about the details of how this works (at least how BT handles the various situations).

    #19     Jul 23, 2002
  10. rs7


    Ok, use a "credit" butterfly instead. What I meant was that there is no risk that really requires margin (like in a customer account) beyond the initial cost (if any...possible credit if you are lucky enough to find one).

    That I didn't know....what is the reason?

    #20     Jul 23, 2002