Trading has become a popular and legalised activity, with various types and levels of investment. One such type is options trading. But what exactly is options trading? In this article, we’ll delve into the fundamentals of options trading, explore what options trading prop firms are, and highlight the top five options trading prop firms to consider in 2024.
Understanding Options Trading
Simply put, options trading involves a contract that grants the right to buy or sell an asset at a specific price within a set timeframe. This asset can be stocks, foreign currency, or shares. Options trading is attractive because it can yield significant profits in various market conditions – bullish, sideways, or bearish.
Options trading is also known as stock option contracts. Traders can sell (put options) or buy shares (call options) at predetermined prices and times. Importantly, traders don’t buy shares directly; they buy the right to trade shares at specific prices, described in an options contract.
Options trading allows for flexibility and the potential for substantial returns, but it also requires a solid understanding of the market and strategic thinking. It’s crucial to understand the key components of an options contract: the underlying asset, the strike price, and the expiration date.
What Are Options Trading Prop Firms?
Options trading prop firms, also known as proprietary trading firms, invest their own capital in trading rather than client funds. They recruit experienced traders to execute trades with the goal of generating profits for the firm. While these firms primarily deal with options contracts, they are also active in trading futures, Forex, equities, and commodities.
These firms provide significant advantages to traders, such as access to large amounts of capital, advanced trading technologies, and professional training. They create an environment where traders can concentrate on implementing complex strategies without the responsibility of handling their own funds.
Top 5 Best Options Trading Prop Firms to Start Your Journey
1. Maverick Trading
Maverick Trading is a prop firm dedicated to developing skilled options traders by offering a supportive environment that caters to both beginners and experienced traders. They stand out in the industry with their comprehensive approach to training, which includes thorough education on options trading to ensure you are well-prepared before using their capital. One of the key features of Maverick Trading is their emphasis on coaching and mentorship; experienced coaches and mentors are available to guide you throughout your trading journey, providing invaluable support and insights.
The firm also fosters a collaborative community where you can connect and learn from a network of fellow options traders. This sense of community can be incredibly beneficial, as you can share experiences, strategies, and tips with other traders. Maverick Trading’s Capital Sharing Program is another standout feature, offering traders access to substantial funding. This allows you to execute complex options strategies that could lead to higher returns without risking your own money.
Additionally, Maverick Trading provides flexible trading options, allowing you to work remotely and tailor your trading schedule to fit your personal needs and lifestyle. This flexibility can be particularly appealing if you are looking for a work-life balance or need to manage other commitments alongside your trading activities.
However, there are a few considerations to keep in mind. The training process at Maverick Trading can be lengthy, requiring a significant investment of time before you start live trading. The program fees can also be high, which may be a barrier for some traders. Furthermore, the application process is selective, meaning not everyone will be accepted into the program.
Overall, Maverick Trading is a strong option for those who are serious about becoming skilled options traders. They offer a comprehensive learning experience combined with real-world trading opportunities, making them an excellent choice for committed and motivated individuals looking to advance their trading careers.
2. Jane Street
Jane Street isn’t your average options prop firm. It’s the Ivy League of options trading, attracting the best and brightest quantitative minds from across the globe. In 2024, it’s set to remain a leader in the field by developing innovative trading strategies and using the latest technologies. They attract the best traders from around the world through a rigorous selection process, ensuring only the most talented join their team.
What sets Jane Street apart is its merit-based system and performance-based incentives. Traders are driven to excel, knowing their compensation, which includes both salaries and bonuses, is directly tied to their success. The firm provides substantial capital, cutting-edge technology, and complex strategies, allowing traders to expertly navigate options and derivatives across various markets with proprietary algorithms.
It’s important to note that Jane Street’s environment is highly competitive and demanding. The hiring process is very selective, and the firm expects new traders to start strong, offering no initial training or coaching. This high-pressure setting can be tough for those who find it hard to consistently perform at a high level.
In essence, Jane Street is a great fit for experienced traders who thrive in competitive settings and seek access to large capital, advanced technology, and sophisticated strategies. The firm’s focus on innovation and rewarding success makes it a motivating place for top traders to grow their careers.
3. T3 Trading Group
T3 Trading Group is a great fit for traders who want flexibility in their trading environment. You can choose to trade from home or work in the office, and you have the option to trade independently or as part of a team. They provide access to multiple trading platforms like Lightspeed Trading, Sterling Trading Tech, and RealTick, allowing you to explore various markets and instruments. Plus, you get to keep between 50% and 90% of the profits you earn.
What makes T3 Trading Group stand out is their thorough recruitment and training process. They take their time to evaluate new traders through exams and interviews, ensuring that they only bring in the most dedicated and skilled individuals. This focus on education and professional growth makes it a great place for those who want to keep learning and improving.
But there are a few things to keep in mind. You need to contribute $7,500 as risk capital, and the training program can be quite expensive. Additionally, the commissions and fees are on the higher side, which might affect your overall earnings.
All in all, T3 Trading Group is perfect for traders who value flexibility and continuous learning. With the ability to trade remotely or in-office, access to a variety of platforms and markets, and a strong focus on education, T3 Trading Group offers a supportive and dynamic environment for traders looking to grow their skills and succeed.
4. SMB Capital
SMB Capital, located in Midtown Manhattan, is a top choice for traders who want intensive training and the chance to work with elite professionals. This proprietary trading firm offers a comprehensive program that includes capital, proprietary technology, training, coaching, and mentoring to help traders excel. They support trading in equities, options, and futures, and fund both new and experienced discretionary and automated traders. The learning opportunities are extensive, with industry-leading traders sharing their expertise.
One of the major advantages of SMB Capital is the unique opportunity to learn from and trade alongside some of the best in the industry. Their track record of producing profitable traders speaks volumes about their effective training and supportive environment. The firm takes a flexible and adaptive approach to trading, accommodating different trading styles and strategies.
However, joining SMB Capital isn’t easy. They have a rigorous and selective hiring process, ensuring that only the most committed and skilled traders make the cut. The competitive culture can be stressful and demanding, and their strict risk management policies limit trading size and exposure, which might feel restrictive to some traders.
SMB Capital is ideal for traders who are serious about mastering their craft. Their meticulous selection process and growth-oriented environment provide extensive training and mentorship, making sure that traders are well-prepared to succeed in the competitive world of options trading. If you’re ready for a challenge and eager to learn from the best, SMB Capital could be the perfect fit for you.
5. Funder Trading
Funder Trading is a unique prop firm that opens doors to US options trading without the usual hurdles of certification or upfront capital. They provide live coaching, comprehensive education, and access to their powerful TrueEdge trading platform, empowering traders to navigate the US stock and options markets effectively. Traders retain 100% of their profits until their startup fees are covered, followed by an attractive 80/20 profit split in their favor.
The downside, Funder Trading focuses exclusively on the US market and options, limiting opportunities in other asset classes like forex or futures. Additionally, their program fee can be relatively high, which may impact overall profitability for traders seeking lower-cost alternatives or broader market exposure.
Funder Trading is an excellent choice for US-based traders seeking a streamlined entry into options trading, particularly those who are new to the field. Their comprehensive support system and powerful platform provide a solid foundation for success. However, if you’re looking for broader market exposure or lower-cost options, you might want to explore other prop firms.
What to Look for in Options Prop Trading Firms
When choosing a prop trading firm, consider the following:
Specialisation
Prioritise firms with a proven track record and specialisation in options trading. Their experience translates to better support and resources specifically for options strategies.
Training and Education Programs
Look for comprehensive training programs that cover both foundational concepts and advanced options strategies. Quality education is crucial for developing the necessary skills to navigate the options market effectively.
Capital Allocation
Understand the firm’s capital allocation process and profit-sharing structure. Ensure they provide adequate capital to execute your desired trading strategies. This allows you to explore complex strategies without risking your own money.
Trading Platform and Tools
Evaluate the firm’s trading platform for its capabilities and available tools. Look for features like advanced order types, real-time data feeds, and charting functionalities that enhance your trading efficiency and effectiveness.
Risk Management Policies
Understand the firm’s risk management practices and tools. Effective risk management protects both the trader and the firm from excessive losses. Look for features like stop-loss orders, margin requirements, and position sizing limitations.
Reputation
Investigate the firm’s reputation through online reviews, testimonials, and regulatory status. A firm with a solid reputation is more likely to offer a reliable and supportive trading environment. Look for positive feedback about their training, technology, and overall trader experience.
Experience Level
Some firms cater more towards beginners, offering extensive training programs, while others focus on experienced traders who can thrive in a high-pressure environment. Choose a firm that aligns with your current skillset and goals.
Fees and Commissions
Understand the firm’s fee structure, including program fees, trading commissions, and profit-sharing arrangements. Make sure the costs align with your budget and potential profitability.
Flexibility
Consider if the firm offers remote work options and flexible trading schedules. This can be crucial for those who value work-life balance or have other commitments.
