After 20 years or so of letting my broker route orders, I'm wondering if it's time for me to figure out what I'm doing. For two of my stocks, this year I've traded several hundred contracts in each. The average cost per contract for one is 21 cents and for the other it's 98 cents. In some cases I provided liquidity. In others, not. I have no clue what the breakdown was but even so if I knew it, I doubt that the liquidity rebates were significant. I also have not paid attention to what exchanges the fills were on and at this point, I'd rather ask here before tearing into statements and matching massaging the data in spreadsheet. So my question is, is such a commission disparity disparity due to the option market makers in the stock or is it due to the exchange that they are traded on? If the latter, would it be beneficial to route my orders directly to that lower commission exchange for the option orders that I'm being charged 98 cents contract? Or if you have a better suggestion, hit me up with it. TIA.
Options traded in non-penny pilot symbols have higher fees/rebates than penny pilot symbols. E.G C2 is around (0.42)/0.49 for single leg penny pilot symbols and (0.80)/0.85 for non-penny classes symbols. (Maker/taker) Bob
Thanks for the suggestion but that's not applicable here. The one with 98 cents commission per contract is in the penny pilot program and the one at 21 cents per contract is not and tends to have low liquidity and wider spreads. Any other possibilities?
Different exchanges pay/charge different rebates for adding/removing liquidity. And different brokers let you keep different percentages of those rebates. In general, if you're removing liquidity you will be paying more in commissions than otherwise.
Yeh, I understand that but those factors should not account for an average difference of 77 per cents per contract. I guess that I have to collate the data from my statements and see if the exchanges involved demonstrate any kind of pattern. If so then Plan B might be to direct route some of the 98 cent contracts to wherever the 21 cents contracts are being filled - assuming the data shows that quality of fills on various exchanges are different - and see if the fills improve.