Good broker sought

This is a discussion on Good broker sought within the Brokerages forums, part of the Commercial category; I'm looking to utilise buy/write strategies (long stock, short call) on UK equities. Could someone suggest a decent broker (and ...

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Old Aug 11, 2007, 10:24am   #1
Joined Jun 2006
Good broker sought

I'm looking to utilise buy/write strategies (long stock, short call) on UK equities. Could someone suggest a decent broker (and comm's). Execution-only. I'm in the UK.

Thank you.

Grant.
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Old Aug 11, 2007, 4:34pm   #2
 
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Interactive Brokers seem to have a wide range of order types for options within a gbp account. Because it's execution only you will need to keep a tight watch on margins, they don't issue margin calls, just close you out according to a pre arranged formula until margin is back in line.
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Old Aug 11, 2007, 5:50pm   #3
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grantx started this thread Peto,

Thank you for the info.

Grant.
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Old Aug 15, 2007, 10:43am   #4
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Originally Posted by grantx View Post
I'm looking to utilise buy/write strategies (long stock, short call) on UK equities. Could someone suggest a decent broker (and comm's). Execution-only. I'm in the UK.

Thank you.

Grant.
Hi Grant,

Berkeley Futures Ltd, I company that i work for, allow you to write options on a covered basis on UK stock. You get a haircut value against the stock depending on the quality of the stock that you lodge as collateral. This means that you can lodge vodaphone stock and write BT options against that position or indeed lodge vodaphone stock and write vodphone calls or puts aginst that position.

The haircut value is dependent on whether a stock is SETS 1 or SETS 2 as determined by the LSE and you get a 35% haircut on SETS 1 stocks and 50% haircut on SETS 2 stocks.

Berkeley Futures do not operate a policy on UK covered option writing of not meeting a margin call unless the account becomes a commercial risk.

If you would like any futher info then please ley me know.
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Old Aug 15, 2007, 5:03pm   #5
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So, Berkeley Futures Ltd does not use SPAN for margin calculations? IB will beat it.
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Old Aug 15, 2007, 5:10pm   #6
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So, Berkeley Futures Ltd does not use SPAN for margin calculations? IB will beat it.
Thats not actually what i said. Berkeley Futures does use SPAN to calculate the appropriate margin rqeuirement. I was saying that instead of lodging funds as collateral to meet that span margin requirement you can lodge various types of collateral. For example Gilts, Bullion are other acceptable types of collateral that you can lodge with the claering house. Berkeley Futures will accept all types of collateral that the clearing house accepts and on top of that they will also accept SETS one and SETS 2 stocks to be set against span initial margin requirements.

I wouldn't be able to comment on whether IB allow you to lodge stock as collateral
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Old Aug 15, 2007, 5:54pm   #7
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grantx started this thread BF,

Thank you for the info.

I think I should clarify: I would be looking to buy stock and sell options via the same broker. Can I also buy stock via Berkeley?

Re collateral. In this context I think there is a distinction between 'covered' (by acceptable collateral, and subject to a haircut)and 'buy-write', ie the short in the latter is covered by the underlying thus, no risk and no margin.

Grant.

Last edited by grantx; Aug 15, 2007 at 6:01pm.
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Old Aug 16, 2007, 9:33am   #8
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BF,

Thank you for the info.

I think I should clarify: I would be looking to buy stock and sell options via the same broker. Can I also buy stock via Berkeley?

Re collateral. In this context I think there is a distinction between 'covered' (by acceptable collateral, and subject to a haircut)and 'buy-write', ie the short in the latter is covered by the underlying thus, no risk and no margin.

Grant.
Hi Grant, yes you can also buy stock throgh Berkeley. And with regards to the collateral what you say is right because in effect it summounts to the same thing. This is because the collateral value of the stock you have bought and written an option against is always going to be greater than the span margin required by LCH. So no cash amount is required.
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Old Aug 16, 2007, 3:12pm   #9
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grantx started this thread BF,

Pm or e-mail your comm's for stock and options. A name would also be appreciated.

Grant.
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Old Aug 17, 2007, 12:06pm   #10
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BF,

Pm or e-mail your comm's for stock and options. A name would also be appreciated.

Grant.

Hi Grant,

For writing covered options we charge £6 per option per side with a minimum charge of £10 and for stock dealing we charge 0.5% with a minimum charge of £30.

If you have any other questions then please let me know.
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Old Aug 17, 2007, 1:49pm   #11
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grantx started this thread BF,

Thank you for the info. However, I reckon there are more competitive rates avilable.

Grant.
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Old Aug 17, 2007, 3:32pm   #12
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BF,

Thank you for the info. However, I reckon there are more competitive rates avilable.

Grant.

Hi Grant,

We're not really a deep discount broker however we do offer service and run a dealing desk etc so we tend to charge a bit more and offer a lot more in terms of service. In addition rates come down the more active you are etc.
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Old Sep 2, 2007, 7:42am   #13
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Why IB?

Dear Grant

For your reference,

• We are a publicly traded company on NASDAQ (ibkr is our symbol)
• We have been in business for over 30 years
• We are regulated by the SEC, CFTC and FSA
• We process over 550,000 transactions per day
• We support regulated products with the exception of forex (i.e., our forex feed comes from the top prime brokers thus we do not get in the middle of the spread)
• We provide direct access trading to over 70 global exchanges and solely from one Universal Account, thus we do not get in the middle of the spread you trade direcly into the market
• You can trade multi asset classes (i.e., shares, options, futures, bonds, ETF’s and forex)
• We offer account protection up to $30 million
• We pay interest for your funds on deposit => $10,000
• We offer competitive margin rates i.e., Reg T, Portfolio Margining, and etc
• We ask $5,000 initial deposit to open an account
• We ask a minimum brokerage fee of $10 per month
• Market data fees vary per exchange or region e.g., we ask $10 per month to view live data for futures, options, and share exchanges in the US
• Brokerage fees vary per exchange e.g., we ask $0.005 per share (all in, plus Smart Order Routing) for US shares, $0.15 to 0.75 per US options contract (all in plus Smart Order Routing), GBP 6.00 per transaction for GBP UK LSE shares =< 50,000 in trade value (all in plus Smart Order Routing) although Stamp Duty applies on purchases, GBP 1.70 per UK options (all in) and other low fees for other exchanges
• Our Trader Workstation is simple, flexible, scalable, supports over 40 order types, offers technical analysis, Option Trader, analytics, market scanners, option modelers, supports spread features (e.g., buy writes, verticals, and etc), Penny Pricing for US options, Smart Order Routing (= Best Execution) and more…
• We are a very risk adverse company. Hence we ask clients to keep the appropriate margin in their account at all times to meet their margin requirements. If not, we reserve the right to close any position that does not meet your margin requirements. To assist our clients we offer scalable alerts to notify them when their positions are close to a margin deficiency.

We ask all of our clients to compare us before they open an account. That is, unlike other brokers that do not post all of their services and fees on their website in order for their prospects to compare against others, we do. Hence refer to our website www.interactivebrokers.co.uk and if decide to open an account you can contact our local UK office for assistance 020 7 776 7800.

Thank you and the best of luck regardless who you choose as your broker.
__________________
Sincerely
Interactive Brokers

Last edited by Interactive Brokers; Sep 2, 2007 at 7:45am. Reason: typo
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