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 – Lime Trading Corp “Lime Trading”, a leading agency broker delivering fast, reliable and scalable direct market access to the US equities and options markets, announces the appointment of Eva Sehic as Chief Executive Officer and Johan Sandblom as President and Head of Business Development. These appointments reinforce Lime Trading’s commitment to optimizing business operations to best serve the trading community and deliver continuous product innovations that empower sophisticated retail traders alongside institutional clients.

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Eva Sehic is a proven leader with extensive experience leading mission-critical business operations in complex global markets at renowned firms including Goldman Sachs and Deutsche Bank. Since joining Lime in September 2023, she has achieved significant cost containment, operational efficiency, and collaborative strategy development, laying a solid foundation for further innovations.

“I am honored to lead alongside Johan to deliver unmatched execution quality and hightouch client services and am committed to growing our community of sophisticated traders via both our screen trading platform (Lime Trader) and our trading technology suite (Lime Direct).” She continued, “I have truly enjoyed getting to know the Lime Trading team am eager to further our mission to serve our diverse community of traders, partners, and employees.”

As President, Johan Sandblom — who has championed Lime execution technology for nearly two decades — will focus on fostering growth and innovation through enhanced product development and deeper collaboration with the trading community.

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“The essence of Lime Trading’s success lies in the transparent, collaborative relationships we cultivate with our clients,” stated Johan Sandblom. “Our leading-edge execution technology ensures top-tier performance for both retail and institutional traders, positioning Lime Trading as the ideal partner for ambitious traders at every level—from emerging retail traders and systematic novices to established hedge funds and market makers.”

Lime Trading was established in 2000 by hedge fund traders who couldn’t find a brokerage firm to meet their needs for volume, speed, and privacy — so they created one. Today, Lime Trading is expanding competitive access to everyone who values quality execution. Lime is filling a void between the bulge bracket banks and retail brokerage firms for sophisticated traders that need fast, reliable, compliant, scalable access to the US equities and options markets. 

Lime continues to evolve and expand its offering for traders of all strategic approaches with recent additions of VPS offerings, Python coding languages for its popular retail trading API, and introducing new order types – a direct result of their collaborative client relationship approach. Looking forward, Lime continues to expand its offering to remain at the leading edge of trading technology worldwide.

For more than twenty years, Lime Trading has been focused on developing tools and technology to enhance traders’ access to markets. Through their suite of products and services including a broad range of APIs, platforms and technology solutions, Lime Trading partners with retail and institutional traders to execute trading strategies at the speed they need and execution quality they can trust. With no commission on U.S. equity trading, Lime is uniquely positioned to provide fast, cost-effective access to the markets. Lime Trading Corp is an SEC-registered broker-dealer, member of FINRA/SIPC/NFA.

Lindsey Becker, Chief Marketing Officer at Lime Trading

Lime Trading announces the appointment of Eva Sehic as Chief Executive Officer and Johan Sandblom as President and Head of Business Development. 

Lime Trading Corp Strengthens Leadership Team with Key Executive Appointments

Growth stocks are tricky. They provide head-spinning rallies on the up, and stomach-churning drops on the down. Investors can be miffed by this conundrum – why have we seen a 53% (NFLX) and 40% (TSLA) trailing-24 month drop in prices when the companies haven’t changed? Even when the Nasdaq index fell 13% and the SP500 gained 3% over the same period of time? Well, there’s a graybeard answer for this: value stock prices reflect what the company is, but growth stocks prices reflect what the company is expected to be.

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Few names have reflected this growth-stock rollercoaster better than Netflix and Tesla. Both companies are disruptors in century-old industries. Netflix broke patterns of movie production and broadcasting with their streaming service (and back in the day, with their “rent by mail” DVD service). Similarly, Tesla broke the mold of conventional internal combustion engine (ICE) vehicle manufacturers with a radical combination of battery-based electric motors and a novel high-tech driver’s experience.

This creative disruption gave both companies growth that is very rarely seen in companies of that size. Each of them managed a double whammy of:

Netflix and Tesla’s revenue line grew at an annualized 24.6% and 51.7% compounded annual growth rate (CAGR) between 2015 and 2022, respectively (note: for Tesla, the figure reflects the 12-months to 30 Sep 2022), on the back of an increase in Netflix’s subscriber base to 230.8m from 74.7m and Tesla’s new car sales of 1.3m from about 25k.

But as good as growth is on the up, it can be a destructive “stick in the spokes” when it falls short.

 Because growth stocks are priced according to what the company is expected to be in 3, 5, or 10 years from now, even small changes in expansion expectations have a compound effect over a longer period. Cutting estimates from a 50% to 25% annualized growth rate means that a revenue line that is 5-years out can drop from 7.6x to only 3.0x today’s number. Still impressive, but less than half prior expectations.

Rapid growth is a challenge for mega-caps – and often proves elusive

. Both these names already accumulate overwhelming market shares in the US market and face regulatory or competitive restrictions to grow abroad. Therefore, their expansion depends on both their capacity to continue growing their main business and/or expanding their product portfolio. For example, Netflix has, for a time now, expanded from pure streamlining into original productions and there is a full field ahead with live events (sports?) for the company to explore. Similarly, Tesla has so far focused on high-end personal cars and could look at commercial vehicles and cheaper alternatives – particularly as it competes in emerging markets with low-cost producers from China. But new ventures imply new risks and capital deployment with uncertain results.

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Moreso, stocks don’t care about units sold or customers connected – they care about the money made by doing so, and margins erode after the head-start is over. It is not a new phenomenon – practically every new business disruptor has a period of high margins as competitors are slow to react. For example, Tesla operates with a 26.6% gross profit margin compared to 12.1% and 14.8% for Ford and General Motors, respectively. That means that Tesla has about the same gross operating profit as F and GM despite having about half the revenue. But as incumbents and second-wave disruptors begin competing in earnest (Ford and GM as incumbents, and Rivian and Lucid for second-wave disruptors for Tesla), these high margins are challenged as companies are forced into price cuts or increasing operating expenses to defend market share (for example, Netflix’s original productions to compete with pre-existing catalogs like Disney+).

All of this to say, the case for high-quality growth stocks can be great, as they will likely, over the long run, provide excess returns for investors. However, as the market adjusts for new growth expectations, be prepared for major bumps in the road along the way. It is important for traders to regularly assess these growth stocks to determine for themselves whether these potholes are worth hitting.

The case for high-quality growth stocks can be great, as they will likely, over the long run, provide excess returns for investors.

What’s the deal with growth mega-caps?!

What If We Expect a Robust Rally or Deep Sell-Off?

At the start of the summer in Issue 1, Make or Break Summer for Stocks (July 20), we presented a “bifurcated outlook” strategy, which is based on investors’ expectations of either a strong rebound, (swim), or further sell-off, (sink), following a dreadful first half of 2022.

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Initially, stocks attempted to swim but the rally faltered, and stocks sunk. Between July 20 and September 30, the SP500 fell 9.5%. As a result, the strategy worked well as the underlying index fell more than the 5% threshold required to accrue a profit.

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To investors who remain in a “bifurcated outlook” mindset (i.e., expecting a big move but in an uncertain direction), this strategy remains a viable way to position their investments.

The strategy (i.e., technically, a “short condor”) can be deployed with any underlying security with an active options market, such as the index-tracking ETFs SPY (S&P500), QQQ (Nasdaq), and IWM (Russell 2000).

This position is relatively aggressive. It provides a profit if the underlying security gains or loses 5%+ but could lead to a 100% loss if the market trades sideways.

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Depending on the equity market performance, as reflected in the indexes tracked by each ETF, each position would have a maximum value of $2,000 at expiration if the move is above approximately 10%, $0 if the move is between +5% and -5%, and at pro-rata for intermediate performances.

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What could go wrong with this type of strategy?

This strategy is aggressive. It requires a significant move in the equity market to produce a profit and could lead to a 100% loss if the security (in the example, the index-tracking ETF’s SPY, QQQ, or IWM) fails to move more than 5% between now and year-end.

Sink or Swim Reloaded

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Traders need to be flexible in all types of market environments, whether bullish, bearish or flat. Options, especially multi-leg options, can provide traders with ways to customize their strategies to suit their views on the market’s direction.

Multi-leg options, also called complex options, simultaneously buy or sell options of the same underlying security. They offer traders three main benefits:

: Multi-leg options can save time in a fast-moving market. Instead of executing each leg of the options trade one at a time, traders can carry out a strategy with a single order and remove the time lag between each option entered manually. A slower trade using single-option orders can increase slippage as prices change between executions.

: Multi-leg options tend to be slightly less expensive than single-option orders because the proceeds the trader makes from selling options can offset some purchase costs. The flip side of this is that there will be slightly higher commission costs with multi-leg strategies, and profit ranges may be more limited than single-leg options.

: Multi-leg options allow traders more versatility in their trading by offering more tools in the toolbox to take advantage of bull, bear, and neutral markets. Traders can tweak strategies to limit or increase risk as well as maximum and minimum profits, allowing a wider range of trades that can be tailored to more scenarios.

Keep in mind that multi-leg options involve risk and are not suitable for all traders. Transaction costs may be significant in multi-leg options strategies, and advanced options strategies often involve greater and more complex risk than single-leg options. Losses with multi-leg options can be greater than the initial investment. Evaluate the benefits and drawbacks carefully.

In a flat market, these two multi-leg options strategies can be useful to traders and developers who want to take advantage of the conditions:

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: To create an iron butterfly, the trader buys one call option with a strike price above the target price, sells both a call and a put option using the strike price nearest the target price, and buys one put option with a strike price well below the target price.. Each option has the same expiration date. The strategy is not named after the band that sang “In-A-Gadda-Da-Vida.” It comes from the butterfly-like shape of the graph that illustrates the strategy’s profit and loss, with each leg of the trade looking like a wing, as you can see above.

: With an iron butterfly, you receive a net credit into your account immediately, and you minimize downside risk with this defined risk trade. The strategy earns the maximum profit when the underlying asset closes precisely at the middle of the strike prices at expiration.

: The iron butterfly limits risk, but also profitability. You need to close precisely at the middle of the strike prices to maximize profit.

: Let’s build an iron butterfly with an example of using Netflix stock, which traded at $173 per share in early May.

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1. If you think Netflix stock will stay close to $175 per share, you could buy a call option with a $177.50 strike price, sell a call option at a $175 strike price, sell a put option with a $175 strike price, and buy a put option with a $172.50 strike price.

2. This strategy would give you a $185 credit in your Lime Trader account.

: If, at expiration, Netflix stock closes precisely on the strike price of $175, you can earn $185, minus $2 commissions for the two wings of the iron butterfly.

: If Netflix stock stays between $173.15 and $176.85, you at least break even.

: If Netflix stock drops to $173.15 or below, or rises to $176.85 or above, you would lose a maximum of $65.

4. If the iron butterfly expires with Netflix stock between $173.15 and $174.99, you could end up with 100 shares, or if it expires with Netflix shares between $175.01 and $176.85, you could end up with short 100 shares, so you should manage these positions if you wish to avoid the exercise of the option.

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: Much like the iron butterfly, to create an iron condor, the trader buys one out of the money put and sells one put closer to the money put while buying one out of the money call and selling one call closer to the money. Each option has the same expiration date. The name comes from the bird-like shape of the graph that illustrates the strategy’s profit and loss, with each leg of the trade looking like a wing, as you can see above. You can think of this as a combination of credit call, and credit put spreads that surround a center range.

: With an iron condor, you receive a net credit into your account immediately, and you minimize downside risk with this defined risk trade. The strategy earns the maximum profit when the underlying asset closes between the middle strike prices at expiration. It can be modified to have a bullish or bearish bias.

: The iron condor limits risk, but also profitability. While the strategy is directionally neutral, the premiums can benefit from higher volatility. However, the higher premiums result from that greater risk in a highly volatile market.

: Let’s build an iron condor with the same example of using Netflix stock.

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1. If you think Netflix stock will stay in a range between $170.80 and $177.50, you could buy a call option with a $177.50 strike price, sell a call option at a $175 strike price, sell a put option with a $172.50 strike price, and buy a put option with a $170 strike price.

2. This strategy would give you a $170 credit in your Lime Trader account.

: If, at expiration, Netflix stock is between $172.50 and $175, you can keep that $170, minus $2 commissions for the two wings of the iron condor.

: If Netflix stock stays between $170.80 and $176.70, you at least break even.

: If Netflix stock drops to $170.80 or below, or rises to $176.70 or above, you would lose a maximum of $80.

4. If the iron condor expires with Netflix stock between $170 and $172.50, you could end up with 100 shares at $172.50, or if it expires with Netflix shares between $175 and $177.50, you could end up with short 100 shares at $175, so you should manage these positions if you wish to avoid the exercise of the option.

Use a Broker Built for Multi-leg Option Strategies

Deploying multi-leg options strategies is easier when traders have a broker designed to handle them smoothly. The ease of executing multi-leg options strategies depends on the broker’s configuration. Traders should be aware of commissions owed and the broker’s margin requirements. Executing as one order allows a trader to avoid entering into a position without the worry of not getting executed on one of the legs.

Lime Trader is designed to make multi-leg options trading more accessible. The platform executes simultaneously to reduce execution risk. Lime Trader’s position management features let you select and open, close or roll option legs. The position views provide rollup calculations by strategy and underlying assets to track your portfolio’s P&L and Greek values.

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Stock symbols and company names displayed are for illustrative purposes only. 

Multi-Leg Options Strategies in a Flat Market

 What Multi-Leg Options Strategies Can Help in a Flat Market

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. As the herd retreats, many overlook the value of using multi-leg options strategies to potentially limit risk and generate profit in bear markets.

Multi-leg options, also called complex options, simultaneously buy or sell options of the same underlying security. They have many benefits, including:

: Multi-leg options allow traders more versatility in their trading by offering more tools in the toolbox to take advantage of bull, bear, and neutral markets. Traders can tweak strategies to limit or increase risk as well as maximum and minimum profits, allowing a wider range of trades that can be tailored to more scenarios. Multi-leg options involve risk and are not suitable for all traders. Transaction costs may be significant in multi-leg options strategies, and advanced options strategies often involve greater and more complex risk than single-leg options. Losses with multi-leg options can be greater than the initial investment. Evaluate the benefits and drawbacks carefully.

Traders can access all the benefits of multi-leg options strategies in bear markets. Here are two of the most common multi-leg options strategies individual may use in a declining market:

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: A trader buys call options at a specific strike price while selling the same number of call options with the same expiration date, but at a lower strike price.

: The bear call spread is a premium-generating defined risk trade. Traders can tailor this strategy to their risk profile with narrower spreads for conservative traders and wider ones for people with larger risk tolerances.

: The maximum profit is limited with this strategy.

: Let’s use the example of Netflix stock recently at $172 with a bear call spread, known as a call credit spread.

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1. If you think Netflix shares will drop, you could sell a call option with a $172.50 strike price and buy a call option with a $175 strike price using a bear call spread, also known as a call credit spread.

2. This strategy would give you a $95 credit in your Lime® Trader account, which is taking the difference of the bid on sell and the offer/ask on the buy, minus a $1 commission for two contracts.

 If Netflix stock moves below $173.40 and stays to the expiration date, you can keep the $95 in your account.

 If Netflix stock stays below $173.40, you at least break even.

: If it expires with Netflix stock above $175, you would lose a maximum of $160, which would be the cost of buying the call minus the credit your account received.

4. Keep in mind that if you don’t close your position by expiration, you could end up short 100 shares of Netflix stock, and there is some risk that the stock could move before you could exit the following trading day.

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: A trader buys one put option with a higher strike price and simultaneously sells the same number of put options at a lower strike price.

: The bear put spread, also known as a put debit spread, is a premium-generating defined risk trade. Traders can tailor this strategy to their risk profile with narrower spreads for conservative traders and wider ones for people with larger risk tolerances.

 Let’s use the same example of Netflix stock recently at $172 with a bear put spread, known as a put debit spread.

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1. If you think Netflix shares will drop, you could buy a put option at $175 .

2. This strategy would give you a $90 credit in your Lime Trader account, minus a $1 commission for two contracts.

: If Netflix stock moves below $172.50 and stays to the expiration date, you can keep the $128 in your account.

: If Netflix stock stays below $173.78, you at least break even.

: If it expires with Netflix stock above $175, you would lose a maximum of $122, which would be the cost of buying the put minus the credit you received for selling the other put.

Deploying multi-leg options strategies is easier when traders have a broker designed to handle them smoothly. The ease of executing multi-leg options strategies depends on the broker’s configuration. Traders should be aware of commissions owed and the broker’s margin requirements. Executing as one order allows a trader to avoid the trouble of entering into a position without the worry of not getting executed on one of the legs.

Lime Trader is designed to make multi-leg options trading more accessible. The platform executes simultaneously to reduce execution risk. Lime Trader’s position management features let you select and open, close or roll option legs. The position views provide rollup calculations by strategy and underlying assets, so that you can track your portfolio’s P&L and Greek values.

Stock symbols and company names displayed are for illustrative purposes only.

Multi-Leg Options Strategies for a Bear Market

 Two Multi-Leg Options Strategies for a Bear Market

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The U.S. stock market is one of the few remaining markets that does not trade on a 24-hour basis.

Futures markets trade 23 to 24 hours a day, five and a half days a week depending on the product; cryptocurrency markets trade 24 hours a day, 7 days a week. However, equity markets still have a traditional opening time and closing time.

Having periods of time when the markets are shuttered may provide an advantage to investors and traders, as these quiet hours may act as natural circuit breakers for highly volatile price moves. These smaller trading windows may also be a negative. However, because of this, exchanges have come under pressure in the last 20 years to offer more availability to the marketplace.

Officially, the U.S. stock market opens at 9:30 am Eastern Time and closes at 4:00 pm Eastern Time, Monday through Friday. This block of time is known as regular trading hours (RTH), but in practice, the markets can trade from 4:00 am Eastern Time to 8:00 pm Eastern Time.

The additional outside-normal trading hours are known as the pre-market and post-market trading hours, respectively. Some traders consider trading algorithmic or other strategies during these outside hours, depending on how liquidity, arbitrage opportunities, and other factors affect their plan.

During earnings season, companies release their earnings data either before the open of RTH or after the close of RTH. Because of this, significant moves in stocks often happen in the pre-market and post-market sessions. For instance, Netflix (NASDAQ: NFLX) fell over 20% after their earnings release in January 2022, and most of it happened outside of RTH.

While exciting movement might happen outside of RTH, not all traders can take advantage of the after-hour trading. Some brokers’ systems limit the times their clients are allowed to trade.

If you’re considering trading outside of RTH, ask your broker if they support trading beyond normal market hours. For example, Lime’s clients have access to U.S. equity markets from 4:00 am to 8:00 pm.

U.S. equity markets are deep, but pre-and post-market sessions can have a much lower liquidity profile than RTH. Low liquidity can exacerbate price moves in a stock, especially at the pre-market open at 4:00 am. If your strategy favors exaggerated movements, participating in an outside trading hour session can be beneficial.

Since liquidity is a concern, speed of execution may be critical. If you are not working with a low latency brokerage firm, entire blocks of pricing could pass you by. Nothing feels worse than seeing your price trade and not getting a fill from your platform.

There is only one order type that is accepted in pre-market and post-market sessions: limit orders.

Many traders and trading firms take advantage of outside hours to take positions and take-profits on existing positions at extreme price levels. This may be effective if you are using a brokerage firm that specializes in speed and depth of market access.

Working with a brokerage firm that allows you access to liquidity outside of normal hours may help you get the fill at the price level you want before other traders.

In addition to the opportunities presented by exacerbated price moves, there could also be arbitrage opportunities for dual-listed stocks. The stocks of many companies are listed both in European/Asian markets and the U.S., such as Chinese tech giants Alibaba Group Holding Limited (BABA) and JD.com, Inc. (JD), or Finland’s Nokia Corporation (NOK).

Because of the difference in time zones, some of these stocks may be trading in highly liquid markets in their home countries, while trading in low liquidity conditions in the U.S. during the pre-market or post-market.

Arbitrage algorithms can buy an undervalued security and nearly simultaneously sell the same security at another location where it is overvalued, locking in a small profit. This high frequency trading strategy depends on ultra-low latency.

However, managing colocation centers for low latency can be costly. Before committing to arbitrage trading strategies, you should research the costs from your brokerage firm and consider which fees you’re willing to pay for high frequency trading.

Outside trading hours may offer advantages, but only if your brokerage firm provides you with a fast, reliable low latency connection directly to markets. Without a solid connection spread across liquidity providers, the disadvantages will likely outweigh the advantages in the long run.

The additional outside-normal trading hours are known as the pre-market and post-market trading hours, respectively. 

After-Hours Trading

There is a great little barbecue place in Austin, TX called Franklin BBQ. People come from all over the country for this excellent BBQ and fantastic brisket. Many days, the line outside Franklin BBQ starts before 5 a.m. Franklin has no set closing time; they serve their barbecue until they sell out each day. If you are in line and they sell out, no barbeque for you. Your only option to come back another day. Close your eyes and imagine this scene, and you have a basic understanding of the importance of your spot in the queue within the order book.

The Importance of Your Spot in the Order Book Queue

If you’re an experienced trader, you likely have seen a limit go unfilled, despite the stock trading heavily at your limit price. Often an unfilled or only partially filled order is because you were too far back in the order book queue. Orders ahead of you were filled, but there were not enough shares for sale to fill every order and trade through your price. The prospect of going home empty-handed is alpha-destroying for algorithmically-driven traders, which makes the queue position critical for high-speed algorithmic traders. A whole set of complex mathematics applies to determining the value of any given position in an order book queue.

The Value of Queue Position in an Order Book

Johan Sandblom

Lime Trading Corp. is a registered broker-dealer and member of <a href="https://www.finra.org/" target="_blank">FINRA</a> and <a
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Options involve risk and are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Please review the <a
 href="https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document"
 target="_blank"
 >Options Clearing Corporation Options Disclosure Document</a
 > for the risks associated with trading options. Hedging and protective strategies generally involve additional costs and do not assure a profit or guarantee against loss.
With long options, investors may lose 100% of funds invested. Covered calls provide income,
downside protection only to the extent of the premium received, and limit upside potential to the strike price plus
premium received. Multi-leg option orders are not a standard option trade. There is no national best bid or offer for
multi-leg orders. Multi-leg trades are executed on the exchanges at the discretion of specialists or market makers, who
cannot be held to a net price on a multi-leg order. Therefore, you may not receive the national best bid or offer on
each individual leg of an order. Multi-leg orders are executed as a single trade on the same exchange. Legs cannot be
executed separately on different exchanges to get the national best bid or offer for each leg. Each individual leg of a
multi-leg order can be subject to early exercise risk, possibly taking away the protection that the multi-leg position
may provide. Partial or full assignment on a leg may originate a margin call or losses greater than you anticipated when
you entered into the position. When a multi-leg order is canceled or filled, additional reporting may be required by the
specialist or market maker. Reporting fills and cancels may cause delays and create risks, especially in fast moving
markets. Other risks might be associated with multi-leg options trading.

Johan Sandblom

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