Commissions and Profit Targets

Discussion in 'Options' started by mike007, Aug 17, 2009.

  1. mike007

    mike007

    When you get into a spread because they have more then 1 leg, commissions are always on your mind. Anyhow, I was able to get into a PG calender today. I usually look for 20-40% profit targets on one month calenders.

    So my question is, do you figure your 20-40% profit target including your commissions expense or just your entry price?
     
  2. I think it should be gross of fees. The thing is that you are playing with some guys that have very low fees and it would force you to take more risk than what they have to in order to achieve the same net return.

    If you want 0-40% net IMO you are putting yourself at risk for no reason. If you do any interesting volumes (more than 50 contracts per leg), if you are in the US, go with optionshouse. Otherwise do like many of us and swallow the pill...
     
  3. MTE

    MTE

    Does it really matter? If you are shooting for 20-40%, isn't that a wide enough range to accomodate commissions!?
     
  4. mike007

    mike007

    20-40% on a calender is a fair return on your money. It is enough to cover commissions, I was just wondering what everone else does. I do about 30-50 contracts per leg so it does take a nice chunk out of profits for all that commissions.
     
  5. Perzactly!

    Commissions are part of the cost of doing business. The general idea is to try get the most out of the trade.

    Buy sheep, sell deer, you animule!!

    :)
     
  6. Once IB charged me $175 for 200 lots

    I usually buy or sell at least two lots at a time.