commission to profit ratio

Discussion in 'Options' started by yip1997, May 25, 2007.

  1. Anyone likes to give me an idea?

    I gave up 20% of my gross profit as commission cost on average. Is it too high?
  2. I don't think it's high. Small option positions will cost more in commissions on a percentage basis. Open up larger positions.
  3. There are times that I've had higher than 20%, but I shoot for 10% or less if possible. Of course I'm not willing to give up a good play because of it.

    In regards to economies of scale...
    If you are with a good broker, larger positions aren't cheaper than small positions. Actually, I should say, smaller positions aren't more expensive than large positions.

    But I realize that some of you pay a flat fee for every trade, plus contract charges.
  4. I pay a per-contract commission, and so larger position will not change the ratio.
  5. I'm with BMO InvestorLine and their option commissions are:

    Option Price ----------- Commission/Contract

    $0.00 - $1 ----------- $35 + $1.00
    $1.01 - $2 ----------- $35 + $1.50
    $2.01 - $3 ----------- $35 + $2.00
    $3.01 - $4 ----------- $35 + $2.50
    $4.01 - $5 ----------- $35 + $3.00

    Those commissions are for opening and closing the position and I find that it's best to deal with 10+ contracts at a time.
  6. Keep the position open longer and try and squeeze out extra profit.
  7. You are getting ripped off there royally. IB and Thinkorswim can get you $1.25 per contract flat or less.

    On your price scale, 20 long calls at $3.00 premium is $35 + $40 = $75! $150 round-trip or so for 20 long calls??? And you are giving advice on commission cost??????

    IB would be 1/3 that...


  8. That seems crazy to me, are you daytrading options?
  9. Another ET member also has recommend I switch brokers and I have looked into it. But I find BMO InvestoreLine to be very convenient and all my regular Bank of Montreal accounts are linked to it.

    My advice on commissions are based on the limited information the poster provided and any viewer knows that.
  10. #10     May 25, 2007