Doesn't matter with electronic executions, if done with one trade, from the actual clearing and execution side. 1 lot or 100 lot, most firms max out early on. I haven't seen the amount (price of option) of premium to have any effect on the pricing, that must be some weird way to charge more I guess. Don
Yeah, it can get pretty costly. When you can trade 100 shares of stock for 35 cents or less sometimes. Heck, we have a max of 50 cents, 25 cents over 1,000 shares per order each 100 shares. (not a "plug" - but a point) - when you're betting on direction, then why not just buy or short the underlying with stops? Seems a lot cheaper. Don
I haven't looked at it in seven years. But then we paid a fee of $1/contract for anything we executed on in single stocks. I think we were overpaying. Another firm we tried to deal with said they were getting $1/contact for qqq and a lot less for single stocks. I hadn't heard about the caps, but it would make sense as the larger the order the more informed it's likely to be and thus less profitable.
The "ticket charge" type of commissions is done with some of the Canadian rebate trading firms. They have negotiated a fee of $250-$1,000 per day to trade BAC for example. Then they charge their traders something like 5 cents per 100 shares to encourage them to trade 500,000 shares per day each, obviously a profit center, and if the trader is lucky enough to collect half the rebate money, "can" work well for both. Since my friends at Swiftrade have reformed their company, I havent' checked to see how things are currently. I may have to make a call. Most US firms are more "real" trading firms, not playing the rebate game exclusively....although we make a lot from rebates (traders may make or save a couple thousand per month for week by using proper routing...we can actually get paid for "taking" liquidity...nice). All the best, Don
Kinda confused here. So 1-2 cents per contract as in 1 option contract representing 100 shares? Or as someone said multiply by 100 to get the actual $1 to $2 per contract in which case that's mad expensive!!!! How come I only pay 0.70 per contract so a 10 lot costs me $7 with a minimum of $1 per trade? Why is retail cheaper? How is IB f#ck!ng me? Someone fill me in... *lost*
1-2 cents a share. 1-2 dollars a contract (which represents 100 shares). It's expensive because you are getting guaranteed pricing and other servies like research. You also can do a lot of size. Like buy 10,000 options on the screen offer. You pay less because your broker sells your order to a market maker. The market maker thinks you are stupid (on average) and is willing to pay to trade against you. Personally I think people make too big of a deal about payment for order flow. You are still guaranteed best efforts execution. You might miss out on small improvement here or there, but in the long run cheaper commissions will win out.
Yes, they are talking about $1-$2 per contact when your paying $0.70 per contract. You're receiving a platform for electronic execution, where your firm also gets payment for order flow. The hedge fund is receiving a suite of business advisory from their broker, that you don't require or need. That person requires services that helps them run their business, come up with solutions for issues, cap- intro, communicating with third party administrators, accountants and attorneys, etc, is what the rest of the fee is for. We are not comparing the same service.