Portfolio margin vs starting a broker dealer

Discussion in 'Professional Trading' started by deltaf0rce, Jan 17, 2021.

  1. deltaf0rce


    Can anyone speak as to the non obvious pros and cons of creating a BD? I like for instance the occasional opportunity to extend my leverage beyond 6x without having to use a complicated option strategy. I also am considering taking a wealth management practice under my own name so to have that under the same roof (while not completely necessary) would be of interest.

    I would be interested to hear anyone’s rationale to do so vs not do so.

  2. Robert Morse

    Robert Morse Sponsor

    You are going to have to provide more information about you and your plans to speculate if you even have the ability to have that choice. Increased day trading leverage is available for PMA over $5mm. If you do not have a lot more than $5mm, forget the BD path.
    MoreLeverage likes this.

  3. The only way to get 6x leverage with options is through a long position - most likely OTM. That would not be considered a complicated option strategy.
  4. deltaf0rce


    Short of stopping out a position I cannot remember the last time I did a day trade. I am more interested in just knowing from a practical standpoint, what it would entail to open a BD. For instance if the threshold is $5mm then forget it. But if I could be up and running with a couple hundred thousand of prop capital, and millions more in customer assets, and be a functioning BD I would be interested in that.
  5. deltaf0rce


    Aren’t you the same guy who told me that you cannot stop out equity option positions? Yeah, thanks anyway.

  6. Show me an example of a stop placed on an option position?