3 Options Brokers of interest, cost comparison: TOS, TastyWorks, IB

Discussion in 'Retail Brokers' started by Sophie, Nov 30, 2017.

  1. Sophie

    Sophie

    Commissions and margin costs are a significant factor, as is technology and ease of use.
    Regarding the costs, can someone tell me how much the brokers TOS, Tasty Works and IB would charge for an account with a net liquidation of 5000USD, and short 100 SPY at $225, per annum?

    For TOS, https://www.tdameritrade.com/pricing/margin-and-interest-rates.page

    it seems the cost l would be charged 8.25%+1% = 9.25% x (22,500 - 5000) = $1,618 annual margin cost, correct?

    For Tasty Works, https://tastyworks.com/commissions-and-fees.html
    it seems the cost l would be charged 8.00%+1% = 9.00% x (22,500 - 5000) = $1575 annual margin cost, correct?

    For IB , https://www.interactivebrokers.com.hk/en/index.php?f=1595, it seems the cost l would be charged 2.66% x (22,500 - 5000) = $465.5 annual margin cost,
    are the numbers correct?

    in conclusion, TOS, TastyWorks both charge ~4x more than IB?

    Also if held short SPY for the year, I would be expected to pay 4 dividends on top of that right?

    Lastly, l have ~$50K to deposit in one of those brokers, it seems only IB gives the highest % on deposits, +0.66% for deposits >10K USD, and offers 5.821% on ZAR, South African currency. Anyone have any ideas why the interest rate offered for ZAR is substantially higher? as l am seriously considering buying ZAR with the portion of the cash not used for trading. Thanks in advance for advise and views :finger:
     
    Last edited by a moderator: Nov 30, 2017
  2. Robert Morse

    Robert Morse Sponsor

    None of these are correct because you don’t know today, the cost to borrow SPY shares. You seem to be looking at borrow fees not short stock fees. And YES, all shorts pay dividends.

    If interest charges of any kind are more important than customer service, software to fit your trading, commission rates, margin requirements.... then IB is hard to beat at the retail level.
     
    Last edited: Nov 30, 2017
  3. Sig

    Sig

    I'll just answer your last question, South Africa has about a 6% inflation rate. As a result, the interest rate there has to be higher just to keep deposits above water. If you looked at a forward curve, you's see the 1 year ZAR forward trading about 6% below todays rates. Note that the interest on ZAR is paid in ZAR, so that interest rate just keeps you slightly worse off than the .66% you'd be getting if you left it in USD vice converting to ZAR and then converting back in a year. So bottom line is only to invest in ZAR if you think it's going to appreciate for other reasons, there's no free lunch with the interest.
     
  4. Robert Morse

    Robert Morse Sponsor

    I’m referring to debit financing and short stock rates. Our commissions are generally lower at every volume level.
     
  5. CarlosR

    CarlosR

    Thanks Robert for the information, I agree with you
     
  6. Sophie

    Sophie

    so if only had 5000USD net liquidation, the current cost of being short 100 SPY at 225 per annum is called the short stock fee ? and not the borrowing fee, which l was looking at? is IB's short stock fee significantly lower than TastyWorks and TOS?
     
  7. Robert Morse

    Robert Morse Sponsor

    When you sell a stock short, your broker needs to borrow the security to make delivery to the buyer. If the stock is in house or easy to borrow, there might be no fee. Most clearing firms charge something each day the loan you that stock. the hard it is to borrow, the higher the fee. It changes each day. It is my exception that IB would be a lower fee than the other brokers, but that might not be true. If I wanted to be short SPY over along period of time I would use options or futures.
     
  8. Sophie

    Sophie

    thanks for making that a bit clearer, so my plan was to exchange my USD excess funds not used in trading, to ZAR and enjoy a much higher rate of interest. 'Note that the interest on ZAR is paid in ZAR, so that interest rate just keeps you slightly worse off than the .66% you'd be getting if you left it in USD vice converting to ZAR and then converting back in a year', why is it that the nominal 0.66% interest from USD be slightly better than the 6% from ZAR? l plan to exchange it to USD, so would of enjoyed ~ 10x the IR? converting it back will not be a significant factor, as commissions are reasonable, so it seems like the pairing USD/ZAR will be the big factor, so long as it doesn't go the wrong way by 6%, it should be ok no? please look at the chart, https://www.investing.com/currencies/usd-zar and comment to what l said. cheers :)
     
  9. Sophie

    Sophie

    How much does your firm charge for the short stock fees in %? specifically, if only had net liquidation of 5k and became short 100 SPY at 225 because of an assigned short call at 225? do you think it is a decent idea to enjoy an ~ 10x higher interest rate in ZAR, then exchanging to USD when required? seems to be the USD/ZAR pairing volatility being the main factor? cheers! :)
     
    #10     Dec 8, 2017