Discussion in 'Prop Firms' started by Tums, Jul 30, 2006.
Is there an office in Dallas?
Get over it....Dallas does not deserve any type of prop office....not with Jerry Jones and T.O. in town!
How insulated is a class B member from losing his capital contribution should the firm "blow up" ? What is the likelihood that a blw up could occur vs. other prop firms?
You're not insulated if the firm goes debit. By nature, option firms involve more risk of default due to overnight positions and short gamma/vega. This is not a condemnation of vtrader, rather a cautionary tale for anyone going prop.
I understand. What I'm interested in knowing (which may be impossible to fully know) is what kind of financial stability and risk mangement systems do they have in place to survive some sort of blow up? How choosy are they about the people they bring in and the capital they are willing to allocate to them? Do they bring in newbies with $25,000 and let them sell SPX straddles? Do they have a couple of big traders that could blow the place up themselves?
You need a S7, and they will sponsor you for that. I've seen their ads on craigslist, so don't expect them to be terribly selective. They will offer you JBO haircut, so you can sell SPX combos if you like. I assume they run VaR, but it's meaningless IF the global book is short a lot of gamma/dgamma and someone nukes NYC over the weekend.
They have one huge trader that takes tremendous swings, but I don't know if he's sticking around. Financials may look great, but sh*t works until it doesn't. They're really the only game in town for options-prop. I wouldn't hesitate to recommend them -- the caveats are applicable to any prop shop.
I would draw cash monthly down to my firm minimum req. That goes for any shop you join.
If you want low commish, with less risk, just use a firm like Transact, etc, that caters to high vol traders. If you are not doing volume, don't worry about it, go with security.
I speak from experience. I used a broker that went belly up, and I received only 60% back, two years later! This is futures trading of course, different beast for equities.
I've heard nothing but good things about Vtrader if you want to go work in the SF office and trade in a trading room. Some people make WAY more money this way. No reason to use em if not in their office, IMO.
I've had a conversation and exchanged some e-mails with someone from VTrader. He's been helpful and provided me with all of the documentation I would need to sign so I could review it far in advance. I think they're still relatively new but on the positive side, I had one of my attorneys pull their SEC info and nothing negative was shown. I still don't fully understand the "haircut" margin stuff but they seem to be a firm who allows you to trade your own strategies and wants you to succeed -- they seem like they want to be an "incubator" for talented traders.
If you have 15% haircut it means, as long as you have enough money in your account for a drawdown of max 15% tomorrow, then you are ok. Your actual risk on the position could be 10x your account size, but your 15% haircut allows you too keep the position. Haircut is calculated daily.
Haircut is how option firms manage overnight risk. This is how it is on the floor and off the floor.
This is advantageous to the trader because the firm is taking a more realistic approach to risk and letting the trader be more aggressive.
Haircut for stocks is usually different than indexes.
I run the Chicago office. Not sure if this post will be deleted or not because I'm really not suppose to talk about my firm since we are not a sponsor of this site. But I think it's fair that I address some of the questions being asked here.
On risk management, I think we are probably leaps and bounds ahead of everyone else in this arena because we have 30 years of risk management experience watching over the accounts. Our firm as a whole is net long gamma, a lot of gamma and our firm wide account is all cross margined. We also are very watchful over the downside, more so then the upside for obvious reasons.
No firm is 100% safe, but I feel far safer with guys trading derivatives mostly rather then holding straight stock or futures positions overnight. Or even straight stock intra-day for that matter. I've seen many a stock halt in my day.
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