Options trading

Fremen

Does anyone know of a good internet-based broker where I can set up a trading account to deal in derivatives? Davy seems to deal in CFDs, but nothing else.
I'm doing a master's course in financial maths, which mostly focuses on derivatives pricing, so I know the risks involved in dealing with derivatives.
I'm not planning on betting the farm either, probably just €1,000 or so to pick up some experience, so somewhere that would allow me to trade in very small amounts would be ideal.
Cheers for the advice

casey212

Try interactive brokers. You need to be careful with options, the smart man is selling the options, not buying. A bit like a bookies, you are better off laying the bets.

Fremen

I reckon it's a bit more complicated than just "selling is good, buying is bad". It depends on the terms of the option, how you have it hedged, what the market volatility is, and a lot of other factors.
In fact, I would argue the other way: that selling is more dangerous than buying. I think in "fooled by randomness" taleb suggests that "options sellers eat like chickens and s**t like elephants". One of the first things you're taught when learning about derivatives is that it's very risky to sell a naked option.

Cheers for the advice, I'll take a look at interactive brokers.

casey212

Fremen wrote: »

I reckon it's a bit more complicated than just "selling is good, buying is bad". It depends on the terms of the option, how you have it hedged, what the market volatility is, and a lot of other factors.
In fact, I would argue the other way: that selling is more dangerous than buying. I think in "fooled by randomness" taleb suggests that "options sellers eat like chickens and s**t like elephants". One of the first things you're taught when learning about derivatives is that it's very risky to sell a naked option.

Cheers for the advice, I'll take a look at interactive brokers.

I make a living selling options, I am yet to met a person who makes a living buying them.

digiman 2007

casey212 wrote: »

I make a living selling options, I am yet to met a person who makes a living buying them.

I find this hard to believe

dunkamania

naked selling options is not for the inexperienced, and incorporates massive downside.

damnyanks

Why on earth would you start to invest in options if you've no experience other then a msc in pricing them. The market isnt thick you wont find a sweet deal with a incorrect valuation.

Start off with something simple.

Fremen

damnyanks wrote: »

Why on earth would you start to invest in options if you've no experience other then a msc in pricing them. The market isnt thick you wont find a sweet deal with a incorrect valuation.

Start off with something simple.

The reason I'm interested is because it would demonstrate to a potential employer that I am keen to work in the field. I'm not out for a get-rich-quick scheme, in fact I'd be happy just to break even.
What I'm after is some real-world experience in dealing with derivatives.

portomar

Fremen wrote: »

The reason I'm interested is because it would demonstrate to a potential employer that I am keen to work in the field. I'm not out for a get-rich-quick scheme, in fact I'd be happy just to break even.
What I'm after is some real-world experience in dealing with derivatives.

id try spreadbetting, tends to have lower initial outlay than options.

Mikel

casey212 wrote: »

I make a living selling options, I am yet to met a person who makes a living buying them.

Who are you selling them to?
Are they not 'making a living'?
That makes no sense

Also, a private investor cannot trade by selling options as they cannot hedge them effectively, which is how their value is realised.

if you wanted to you could buy them, but they would be very expensive, that's without any spread added by the broker

Goodluck2me

portomar wrote: »

id try spreadbetting, tends to have lower initial outlay than options.

Im not sure of the terms of the spread with Paddypower, has anyone else had any experience in this field?

portomar

goodluck2me wrote: »

Im not sure of the terms of the spread with Paddypower, has anyone else had any experience in this field?

i dont use paddy power, i use deltaindex the "terms" of the spread vary depending on the instrument. betting euro against pound for example, you need €100 capitalisation for every €1 bet and it costs €8 per point, point being second decimal poin, ie at the mo they're quoting 7528 (i.e. 75.28 pence in our money) so your €1 bet is on the 8 at the end, and how much that changes

Dollarhane

Fremen wrote: »

Does anyone know of a good internet-based broker where I can set up a trading account to deal in derivatives? Davy seems to deal in CFDs, but nothing else.
I'm doing a master's course in financial maths, which mostly focuses on derivatives pricing, so I know the risks involved in dealing with derivatives.
I'm not planning on betting the farm either, probably just €1,000 or so to pick up some experience, so somewhere that would allow me to trade in very small amounts would be ideal.
Cheers for the advice

Depends what you want. I would recommend nobletrading.com which is the best commisssion price you'll find anywhere. I pay 3.95$ a stock trade and $7.95 for an option trade plus one dollar a contract. And when trading small amounts, it commissions are very important. Otherwise if you want to learn about derivatives, optionsxpress.com is very good with fantastic software and free streaming quotes. But be careful because this is mainly based with only American stocks. If one wants to trade internationally then you have to pay more with Noble. However, you can trade almost everything from Futures, forex, options... I feel the pain of having to find a broker-Its like shopping for a new house but after hours on the internet comparing and choosing i use the two websites listed above. One for the prices and the other for its fantastic software. Take it easy and good luck trading.