Tracking Investor Ownership and Fees in a Pooled Trading Account
Summary
The document considers how to handle deposits, withdrawals, ownership shares, and fees when several investors contribute to an account used for covered call selling on FX spot options. One response suggests managed accounts through a broker or routing the same orders to separate accounts through an API. Another proposes treating the pooled account like a fund: divide net liquidation value into shares, issue shares to investors at a stated price, and account for trading fees as expenses that reduce fund equity.
The share-based approach offers a basic framework for tracking each investor’s proportion as capital enters or leaves. However, the post gives no detailed rules for valuation timing, performance allocation, fee calculation, custody, or investor protections. It is an informal discussion, not a complete fund administration or legal structure, and it does not evaluate the covered-call strategy’s returns or risks.
Key ideas
- A pooled account needs a consistent method to track ownership as investors deposit or withdraw funds.
- A share-based accounting approach links investor ownership to the account’s net liquidation value.
- Trading fees can be treated as fund expenses that reduce equity before shares are valued.
- Managed accounts or order routing across separate accounts are presented as operational alternatives.
- The discussion does not specify full valuation, fee, custody, or legal procedures.
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# Hedgefund-like behavior for covered call selling account? # Hedgefund-like behavior for covered call selling account? I make money selling covered calls on FX spot options, and some of my friends want to buy in to this without having to trade their own accounts. One method is for each of them to get an account, and have me trade it, but that doesn't scale well: I really don't want to be trading 10 accounts. The other method is to let them "buy in" to my account. My question: how do I determine what "portion" of my account someone owns, assuming many people (including myself) deposit and withdraw money? Is there a better way of doing this? What if I charge my friends a small fee to trade? I'm guessing the answer is well known, since hedge funds/mutual funds have to deal with this all the time. ## Answer by Terco (score 2) https://quant.stackexchange.com/a/862 I haven't tried myself but from what I have seen your best bet would be the managed accounts from Interactive Brokers. There is a nice post about it here: http://leighdrogen.com/the-hedge-fund-structure-is-dead/ - A quick and dirty option would be to use an API to pass the orders and loop through all the accounts doing that (i.e. one file with the list of orders, one with the list of accounts and a small program to pass the orders). Btw, do you have a track record? ;) ## Answer by glyphard (score 1) https://quant.stackexchange.com/a/615 treat it like a hedgefund(limited partnership) think of your account as a corporation. assign a number shares to your account's netliquidating value(equity). let your friends buy a given number of shares at a given price. take your fee out and treat it as a cost to the fund that lowers the equity. Repeat this process as you take in new money, or when u distribute profits/return funds.
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