Options trading?

[thomastim1980]

Hi All,

I'd like to open up a ltd company whose sole purpose would be to trade financial options (stocks, indices, commodities etc).

1) Would the ltd company need any FSA license to trade?

2) Which is the best broker for Options trading?

I've done a bit of research and zeroed in on IG Markets but their options are a 'form of CFD', which means I will not be able to excercise any if I want to. So, does anyone know of any brokers where I could trade 'real' long term options?

 

[directmarketingadvice]

I've done a bit of research and zeroed in on IG Markets but their options are a 'form of CFD', which means I will not be able to excercise any if I want to.

They're more like futures. However, if you want to lock in profit, you can simply trade the opposite side of the trade.

e.g. you buy at 1000, price goes to 1200, you sell at 1200, leaving you with a profit of 200

(Very simplistic description.)

As for your first question, I suspect that you'll need to be FSA approved. However, this is just a guess and I could be wrong.

Steve

 

[thomastim1980]

Thanks Steve.

If I trade options at IG Markets, which as they say are a form of CFD, would I not be trading against them (and not the markets) and be at their mercy?

I've read a few reviewers say that CFD guys do resort to a lot of shenanighans to prevent you from making money as it means they are the ones losing it.

If, however, I trade against the markets, it means the broker is just what the name says. He quotes me a price and takes a cut from my buying or selling volume.

So, does anyone know (or trades) any brokers that put their Options orders out to the markets?

 

[directmarketingadvice]

Thanks Steve.

If I trade options at IG Markets, which as they say are a form of CFD, would I not be trading against them (and not the markets) and be at their mercy?

I've read a few reviewers say that CFD guys do resort to a lot of shenanighans to prevent you from making money as it means they are the ones losing it.

If they're acting as a market maker, they shouldn't be losing money. Their income should be from the bid-offer spread.

If they start pricing things too high or too low in order to screw one client, they'll get done over by other traders taking advantage of those mis-pricings.

Steve

 

[guvna]

Hi All,

I'd like to open up a ltd company whose sole purpose would be to trade financial options (stocks, indices, commodities etc).

1) Would the ltd company need any FSA license to trade?

2) Which is the best broker for Options trading?

I've done a bit of research and zeroed in on IG Markets but their options are a 'form of CFD', which means I will not be able to excercise any if I want to. So, does anyone know of any brokers where I could trade 'real' long term options?

1) That depends on what you are looking to do. If you are managing your own account then there is no need to be regulated. If you are looking to advise clients on what to trade or manage other peoples money then you need to be regulated.

2) Who are you trading options with at the moment? There is interactive brokers who have a UK office and offer a wide range of options markets. If it is FX options you are trading then there is also saxo bank. I have an IG account and they do not offer many options online but if you phone up they should be able to price most options for you. For example, you can not trade any equity options online but they let you do this over the phone.

What is the reason for registering the business?

With interactive brokers you are going direct to market and it sounds like that is what you are looking to do

 

[thomastim1980]

1) That depends on what you are looking to do. If you are managing your own account then there is no need to be regulated. If you are looking to advise clients on what to trade or manage other peoples money then you need to be regulated.

2) Who are you trading options with at the moment? There is interactive brokers who have a UK office and offer a wide range of options markets. If it is FX options you are trading then there is also saxo bank. I have an IG account and they do not offer many options online but if you phone up they should be able to price most options for you. For example, you can not trade any equity options online but they let you do this over the phone.

What is the reason for registering the business?

With interactive brokers you are going direct to market and it sounds like that is what you are looking to do

Thank you mate.

1) I intend to set up a ltd Company which manages its own funds so as to keep that business separate from my own. I am not sure how ltd company accounts are viewed by brokers and what are the eligibility requirements. If its too much hassle, I might just trade for myself in an individual capacity.

2) I dont currently trade options but I wish to. No, I am not looking at FX options but mostly Equity/Commodity options in the UK/US markets. The reason why I do not want to trade with IG is coz as they themseleves state 'Our options are a form of CFD', which in simple terms is a bet against IG itself. I'd rather trade with a broker who pitches me against the market and with a real option I can keep open the possibility of exercising it, if I want to.

I've checked out optionsXpress.eu and found them very good. I had a lengthy 'live chat' with one of their officers. However, as they are based in the US, the severly limiting factor is that you have to send them a wire transfer to fund your account (which might cost money?). For withdrawals they'd charge you $39 for the wire transfer (although check withdrawals are free). Commissions, taxes etc is fair enough but to pay money to withdraw your own funds is a bit too much.

I will check out Interactive tonight. Could you please tell me about your experience? Are there any other brokers who'd let me trade options?