Couldn't find a relevant thread so starting a new thread. I currently use IB and trade about 10,000-15,000 option contracts a month. Bulk of my trading is 5 SPX option spreads at a time for which I get charged $11.38 / $12.38 depending on options price. I think it gets little cheaper late in the month when I get to 10,000 contracts but it is always reset at the beginning of month. Is it possible to find a broker which will be cheaper than IB or should I try to negotiate with them ? I am already into 6 figures in commission this year.
Most of the scrape on the SPX is the exchange fees, IIRC it's 35-45 cents per contract (under/over $1 in premium) as a customer. So it's going to be hard to find anything really cheap. Unless I am misreading you, you do a hundred trades a day (15k/(20*5))? If you are trading that type of size you must be sitting on an institutional size capital (mid to upper 8 figures). So why not use a baby prime like Newedge or Pershing (there are a few others)? As an added bonus, you can then arrange coverage by a few dealer/MM desks so you get more competitive markets than the screens. PS. Bob Morse is probably the best person to answer this, let's wait for him
Secret Santa, Newedge is now Societe Generale (Does not take small accounts) and I do not think Pershing is approved for PMA. Here is a good estimate of CBOE fees last I looked. I do not update this often. (Without commissions and reg fees.) His volume under our active trader rates would place him at $0.35/option including the OCC fee of $0.05. https://www.lightspeed.com/pricing/commission/. On Sterling Trader Pro, Realtick and Silexx we can track these fees.
Yeah, I have no idea who the good primes are these days for that kind of capital. So the total for someone in 10k+ monthly range would be anywhere from 80 cents to a dollar per contract, once the CBOE fee is included?
The ORF fee keeps changing, but this is a good estimate if you qualify for the $0.35/option rate, not including the cost of software and market data on Sterling Trader Pro, Realtick and Silexx.
Just to be clear - cheapest or best. If execution quality is an issue with size trades consider a prime or bank with a dedicated SPX desk. Cheapest is a dime over fees.
IB won’t negotiate. I was in a similar situation w them about 10 years back. I was paying 300-400k in pure(ex exchange fees) commish to them and they couldnt care less to accommodate me. At your volume you should look at the CBOE trading permit and cut your exchange fee as well.
That is not going to work. You have to be a SEC registered Broker Dealer. The clearing firms that do that business do not take small AUM. You need $10mm+. More complicated than just paying for a permit. There is the CBOE Frequent Trader Program ("FT"). Volume of 10K only gets you to the first tier. Lightspeed canoffer FT. http://www.cboe.com/products/frequent-trader-program-cboe Bob
I vote Robert Morse as the most knowledgeable person on ET regarding all manner of tricky broking type stuff.