Options and shorts

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Jonesness's picture
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Joined: 2008-02-26

Are there any other major players other than jones that do not allow options in their portfolios??

EDJ4now's picture
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Joined: 2006-02-08

I am allowed to use them, but my compliance guy crapped his pants when he first found out that I had a client that would be selling naked calls.  He did approve it though.

Jonesness's picture
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Joined: 2008-02-26

I'm thinking just about everyone else can option..im with EJ..just LOST my only MM client because we couldnt pull some shorts for him......SUCKS

Ashland's picture
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Joined: 2007-03-06

I've learned there are two things you need to know about those types of big clients. 1 - They're great when they're around. 2 - They're going to leave(or at least a part of their relationship will) because they're going to find someone who they think is smarter or has something better. It's not a knock on you or Jones, it's just that money is always looking.

Spaceman Spiff's picture
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Joined: 2006-08-08

Are you asking about margin trading (shorting) or options (puts & calls)?  You can do margin trading at EDJ.  There's a compliance letter you have to have your client sign, but you can do it. 
 

Broker24's picture
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Joined: 2006-10-12

Might also consider some of the 130/30 funds out there, if that is something that would satisfy a particular client.  I have found many of my wirehouse clients (that came from wirehouses) had shorts in their portfolios, but they really only had them because their broker said to have them.  They could have cared less about them.  Although, it is a nice arrow to have in the quiver.  It's much easier to say "we shouldn't do these" when we can actually offer them.

compliancejerk's picture
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Joined: 2004-12-03

Spaceman Spiff wrote:
Are you asking about margin trading (shorting) or options (puts & calls)?  You can do margin trading at EDJ.  There's a compliance letter you have to have your client sign, but you can do it.
 
Any chance you could provide a copy of that letter?
 

compliancejerk's picture
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Joined: 2004-12-03

I got to learn how to comprehend
 
Yes ej permits shorting
 
but not options (hence my disbelief smiley faces)

Jonesness's picture
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Joined: 2008-02-26

EJ permits margins(BORROWING FOR INVESTMENTS).... going short on a stock, but not calls or puts (options)....I outta know...I'm trapped there
If I post some derragatory posts from my office computer...........HHMMMMNNNNN.

rankstocks's picture
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Joined: 2005-02-10

Jonesness,
    Are you for real?  Any moron at Jones knows you can short stock, or buy short or ultra short index ETF's.  If you lost that client, it's probably your fault.  You must be very GREEN behind the ears.

Jonesness's picture
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Joined: 2008-02-26

Stankstock,
What is your malfunction..you are a green green Jonsie right??  Lets see you go long a put, show me how to do it.  Oh...you cant..neither can I.  Give me a break..3-1 That I am more "REAL" than you.

Spaceman Spiff's picture
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Joined: 2006-08-08

Let me make this a little simpler for you.  I think the fact that you lost a 7 figure account is messing with your reading comprehension skills. 
 
Rank is saying that instead of losing that client, you should have offered him the opportunity to short some stock (legal and doable at Jones) or buy an ETF that shorts an index.  DOG (thought that one might be easy to for you to remember) is a ProShares Exchange Traded Fund (ETF) that shorts the Dow 30.  You could have offered him those as an alternative to buying options.  Probably less risky, but you are still betting on the market going down.  Jones isn't going to give it their full blessing, but you can place the trade. 
 
Couldn't he have just opened an options account at another brokerage house and kept his serious money with you?  You're getting pissed at Jones for a policy that has been around a lot longer than you have.  You've got to accept that not everyone is going to be a Jones client.  For every one that transfers to ML because they want options, five will transfer from ML to you because you pay more attention to them.  It sucks to lose assets, but that's the biz we're in. 

Broker24's picture
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Joined: 2006-10-12

Spaceman Spiff wrote:Let me make this a little simpler for you.  I think the fact that you lost a 7 figure account is messing with your reading comprehension skills. 
 
Rank is saying that instead of losing that client, you should have offered him the opportunity to short some stock (legal and doable at Jones) or buy an ETF that shorts an index.  DOG (thought that one might be easy to for you to remember) is a ProShares Exchange Traded Fund (ETF) that shorts the Dow 30.  You could have offered him those as an alternative to buying options.  Probably less risky, but you are still betting on the market going down.  Jones isn't going to give it their full blessing, but you can place the trade. 
 
Couldn't he have just opened an options account at another brokerage house and kept his serious money with you?  You're getting pissed at Jones for a policy that has been around a lot longer than you have.  You've got to accept that not everyone is going to be a Jones client.  For every one that transfers to ML because they want options, five will transfer from ML to you because you pay more attention to them.  It sucks to lose assets, but that's the biz we're in. 
 
That's true Spiff.  However, I have lost several BIG prospects to wirehouses and indies that were fundamentally opposed to paying commissions, because they thought it gave the perception of a conflict of interest.  Even after they agreed that a commissioned model was the most economical for them, they felt that since we don't even OFFER managed accounts (yes we have SMA's, I know), that we could not be reasonably neutral in our recommendations.  The fact that I could have said, "sure I can charge you an asset fee every year for your funds" probably would have been enough to get them (even if he chose commissions in the end).  It's just nice to have some more arrows in the quiver.  But 95% of the time, it is not an issue.  I've never even come close to losing a client or prospect over options.

Spaceman Spiff's picture
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Joined: 2006-08-08

I don't think this was a commission issue.  It was a product issue. 
 
I've not lost any clients to a firm because of something I can't do.  I know I haven't been able to land clients because I don't have a fee based biz.  That's why I can't wait for the summer. 

Spaceman Spiff's picture
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Joined: 2006-08-08

We have an SMA platform we call MAP.  Managed Assets Program.  Minimum is $500K. 

This summer, right around Regional meeting time, Jones is supposed to be launching a mutual fund/ETF fee based platform.  You have to have the know the double secret handshake and have the special glasses to read the password to get any real details on it, so we don't know very much right now. 
 
I've heard rumors about it, but nothing from anyone who I would say has the last word.  It's supposed to have 150+ investment options including loaded funds (load waived of course), no loads, and ETFs.  There are going to be model portfolios or build your own to some extent.  Automatic rebalancing, required reviews, etc.  Cost is the one thing they've not said a word about.  I'm completely guessing here, but I would think around 1% a year. 
 
Now, all of this is just rumor and supposition until Weddle gets hit pretty face on our video system and says go.  I've been talking with some of my clients that have money outside of Jones.  ALL of them want to know more about it when it launches.  If they all do it, I'll have close to $3 mil in it before the end of the summer.   And it adds that other arrow in the quiver like B24 said. 

Greenbacks's picture
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Joined: 2004-12-21

Spiff
Have you asked why Jones will not allow the  use fo stocks and alternative investments in a fee based program?
 
 

Spaceman Spiff's picture
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Joined: 2006-08-08

I've not asked that question myself, but I've heard the answer.  Evidently the compliance side of things is the holdup on stocks and other non fund type investments.  I think the lawsuits that ML and MS have faced recently (for putting money into fee based accounts and then just putting them on cruise control) have caused them to think twice about it.  If you have an account that is paying a fee, but there's no service or benefits for that fee there is a problem.  I get it, but at the same time, I have some clients and prospects that would really benefit from a fee based stock portfolio.  Some people just don't want to do SMAs or funds, but want to do fee based.  Right now, I'm out of luck.  Hopefully if the fund version goes well they'll start incorporating other investments into it.   

noggin's picture
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Joined: 2004-11-30

Spaceman Spiff wrote:I don't think this was a commission issue.  It was a product issue. 
 
I've not lost any clients to a firm because of something I can't do.  I know I haven't been able to land clients because I don't have a fee based biz.  That's why I can't wait for the summer. 
If you can't land a client because of something you don't have, you lost them.......

Broker24's picture
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Joined: 2006-10-12

Spaceman Spiff wrote: I don't think this was a commission issue.  It was a product issue. 
 
I've not lost any clients to a firm because of something I can't do.  I know I haven't been able to land clients because I don't have a fee based biz.  That's why I can't wait for the summer. 

Yes, it was more a perception issue. They both felt, in this case, that since I could only offer commissioned products, that it was somehow a conflict of interest. Now, I will not claim to be the best salesman in the world, so it very well may be that a better salesman could have won him over. But just having that service to offer would have made it easier for me. Hey, I'm not proud, I don't need to thump the "this is how we've always done it" gavel. I will take whatever edge I can get to help satisfy a client.

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