Plain Vanilla Options Trades.

[grantx]

Glenn,

I think you are referring to what I refer to as total dkic-heads - client can't pay, so who pays? Firm can't pay, so who pays? Other clients (to a maximum of the Investors Compensation Scheme). They're not fit to be authorised.

Grant.

 

[Splitlink]

In any case, 3 days grace may make him feel better in the fact that he can boast to us of his influence on his broker and the credit that he has, but what use would it have been to him,really? Over the past week his margin calls have got, steadily, worse.

To me, these statements are just an attempt to divert us from the fact that his option trading has gone very badly wrong but he does not want to admit it.

The Black Swan has come home to roost. If nothing else, this thread has shown us all a lesson on Murphy's Law. That anything that can happen, will..Perhaps, those involved in demonstrating this exercise have more than enough money to take a loss such as this and that, in the end, the options will die valueless.That does not detract from the fact, though, that it was a very imprudent thing to do and makes me wonder how they got all that money in the first place.

What annoyed me most, was the attitude with which we were treated. We may be reluctant to follow in the footsteps of the leader but none of us are stupid.

Split.

 

[Profitaker]

There are some brokers who will do this, although I wouldn'tt use them.
Reasons they do it are: -
- For clients they know well, who appear to know what they are doing, who do a lot of business with them ( thereby getting discounted commission) and have a good track record - the like of which writing naked puts gives you, until the bomb goes off.
- For clients who put other clients their way - i.e. new business.
- Because they are smaller brokers trying to grow and willing to take more risk than they should in order to achieve it.

It would be interesting to know whether they withdraw the grace period when the s#@!t really hits the fan. However that's someone elses problem.

Glenn

Are you talking about brokers waiving their margin surcharge, or talking about brokers allowing a 3 day grace period on LCH margin ? I agree that the former is possible, but surely not the later ?

Anybody know who Bulldozer's broker is ?

 

[A Dashing Blade]

Are you talking about brokers waiving their margin surcharge, or talking about brokers allowing a 3 day grace period on LCH margin ? I agree that the former is possible, but surely not the later ?

Anybody know who Bulldozer's broker is ?

Both,3 day grace would be possible as broker settles it's overall margin with it's clearer, accross all clients, it would usually be overmargined.

 

[Profitaker]

DB

So in other words, the broker would effectively rob client Peter to fund client Paul. The prudent client funds the reckless client, who is up to his neck in it. Very worrying, if true !

The other issue is whether 3 days margin grace is an advantage or disadvantage, in the grand scheme of trading short options.

 

[Crap Buddist]

That margin grace of 3 days, is it not like old days of T + 25 etc for buying shares, I mean who funded that ?

Also, just thinking, but if or when the Ftse makes for 6300 / 50 ? will that not give an out for the written short puts or will IV ,perhaps still leave the premiums received struggling. Guess it would depend on IV on the run up. If it does run up giving an out?

is there an IV of the IV , can or do people speculate on that or calculate it ?

Just curio this side...

 

[grantx]

Profittaker,

"So in other words, the broker would effectively rob client Peter to fund client Paul. "

The following may need updating but it was current up to a few years ago.

It's a question of whether clients' funds are segregated from, or aggregated with, the firm's money. If the latter, and there is a big hit, the clients can suffer. This is what happened to Baring's clients.

Generally, how a client is designated - private client, non-private client, professional investor, market counter-part, etc - determines how his funds are treated.

Grant.

 

[Profitaker]

Grant

Interesting. I certainly hope my money is segregated from the like of Bulldozer and Socrates !

 

[Profitaker]

Tonight's truth...

 

[counter_violent]

Grant

Interesting. I certainly hope my money is segregated from the like of Bulldozer and Socrates !

Yes....makes you think does'nt it ......wonder if socco is related to nick ...seems to know lots about him ......the bit I don't get is why he hangs around with a midget sidekick.

Still waiting for the WEEKEND update......cos thats all we deserve.

 

[ian]

Looks like the 'official update' is taking loger to compile than first thought...

 

[watercooled]

Put position

Good Morning,

If the FTSE climbs back above 6300 in the next few weeks, these highly advertised put positions will be profitable, won't they? Would it be prudent to sell the same now at an even better price than the original opening price shown above?

WC

 

[chump]

Water,
The question you pose is a beaut.....it underlies what we see in the market everyday....that is...buy at X on the (hindsight) high ..hold into drawdown ...watch it come back to the entry point...and watch the supply come in of those happy to get out at B/E
Psych ....I love watching it at work ! Now that is not an answer to your question ..so to give you my answer it would be irrelevant that price comes back to entry point ..it would be relevant what is price doing if it reaches that area and time is on thew side of the writer so sideways is also good !

 

[watercooled]

Water,
The question you pose is a beaut.....it underlies what we see in the market everyday....that is...buy at X on the (hindsight) high ..hold into drawdown ...watch it come back to the entry point...and watch the supply come in of those happy to get out at B/E
Psych ....I love watching it at work ! Now that is not an answer to your question ..so to give you my answer it would be irrelevant that price comes back to entry point ..it would be relevant what is price doing if it reaches that area and time is on thew side of the writer so sideways is also good !

Thanks chump,

I understand the points you are making. I guess, the skill is to sell as much time whilst minimising risk/exposure to loss?

WC

 

[Splitlink]

Good Morning,

If the FTSE climbs back above 6300 in the next few weeks, these highly advertised put positions will be profitable, won't they? Would it be prudent to sell the same now at an even better price than the original opening price shown above?

WC

Naked? Haven't you learned anything, yet? After all this thread, you should know that the situation has not changed. The index is just a few hundred points lower, that's all. The same risk will, always, apply and it is enormous.

The opposers on this thread have never said that Socrates would not make money. The risk, if he does not, is what we are talking about, here, and whether that risk is worth the amount that he can make.

This is like crossing Regent's Street blindfolded ten times and getting away with it. Would you do it ten times more?

Split

 

[watercooled]

Naked? Haven't you learned anything, yet? After all this thread, you should know that the situation has not changed. The index is just a few hundred points lower, that's all. The same risk will, always, apply and it is enormous.

The opposers on this thread have never said that Socrates would not make money. The risk, if he does not, is what we are talking about, here, and whether that risk is worth the amount that he can make.

This is like crossing Regent's Street blindfolded ten times and getting away with it. Would you do it ten times more?

Split

Thanks slit,
I repeat my posting above to you:

I understand the points you are making. I guess, the skill is to sell as much time whilst minimising risk/exposure to loss?

WC

 

[dc2000]

the bit I don't get is why he hangs around with a midget sidekick

Standard accoutrement with those looking for TotalWorldDomination

 

[ian]

Standard accoutrement with those looking for TotalWorldDomination

http://en.wikipedia.org/wiki/Megalomaniac

 

[dc2000]

Will Soc be lookin for an exit strategy early doors or still holdin hoping for some foldin?

IV an idea the update won't come this weekend either

 

[counter_violent]

Will Soc be lookin for an exit strategy early doors or still holdin hoping for some foldin?

IV an idea the update won't come this weekend either

Yup...agreed...hardly likely to want to show what a complete and utter town halls he's made of it

Ah well !