Commissions on Options Trades

Discussion in 'Options' started by EliteTraderNYC, Mar 7, 2012.

  1. sle

    sle

    No, they do not. An institutional client (e.g. a large fund) will be covered directly by the sales force at each broker-dealer and the client will comp the order directly with the desks. In listed space, the commission costs will be negotiated together with the levels of the trade itself (e.g. the market might look like 20@ 20.35 w 2c), in OTC on quote only.

    If it is something listed, sometimes the trader will pass this along to the floor or shop it around (latter one very rare), but in most cases it will be done on principal basis. E.g. if I get an order for big chunk of 25x30 Apr VIX call spread, I can, obviously, pass it on to the floor bookie, but if I am in comp with 5 other dealers I will only be win it if the direction of the client trade would fit my book. If the client trades, my bank would be the one getting the commissions directly from the client.
     
    #31     Mar 8, 2012
  2. newwurldmn

    newwurldmn

    From the clients perspective. They will call a dealer for 20,000 SPX calls. He knows he will get done at a specified price or better. He can move on with his day. IB or any other firm can't guarantee a price because they can't take the other side of the trade. A bank can.
     
    #32     Mar 8, 2012
  3. def

    def Sponsor

    All brokers are subject to the MANDATORY marketing fee programs that have been adopted by the exchanges. IB is clear that best execution is the key factor in where orders get routed. That is surely not the case with all brokers. Regardless, while you may not overtly say something negative, you have made insinuating statements directed at IB that could lead to misunderstandings, when you do this like in the previous post, I will point them out.

    Size: IBG's market share in US options is very high. Our dealing desk does have the ability and contacts to get size done on the listed markets. Now I'd argue that few and far between are throwing around 10K size orders but anyone that does, surely has the ability to shop around and not rely on message boards to figure out where and what is best for them.
     
    #33     Mar 8, 2012
  4. Options12

    Options12 Guest

    Def, mandatory marketing fee programs aside, and contrary to your statement earlier, IB does pay for order flow.

    Does it not?
     
    #34     Mar 8, 2012
  5. hajimow

    hajimow

    Good advice . $0.7 plus about $0.04 is almost the max that you get charged by IB unless you hit the bid or ask. To close your positions at 1 cents you don't pay any commision in IB.

    An eye opening experience that has happened to me many times:

    I put an order to cover 100 contracts of an option in my retirement account in Fidelity and then after 20 minutes I put the same order for the same option for 50 contracts and the same price in IB. After two hours, my order was partially filled in IB and then after another hours it was filled in IB but my order in Fidelity stayed opened the whole day. I thought the orders are FIFO. That is why I am hooked to IB.
     
    #35     Mar 8, 2012
  6. sle

    sle

    They certainly do and I do not think anyone here was asking for an execution advice (as you seem to ride into town). Which does not mean that people who do not trade 10k should not know how the size business is done in real life. They should also know that IB is not the only game in town and that "grown-up" firms do not use "cheaper" Interactive Brokers for a variety of reasons.
     
    #36     Mar 8, 2012
  7. def

    def Sponsor

    Of course IB isn't the only game in town but I'm also confident that our executions are amongst the best. As for "grown-up" firms, while there are many prominent firms and institutions using IB's routing and execution technology and the numbers in the financials do speak for themselves. I won't argue with you though that no firm can be all things to all people.
     
    #37     Mar 8, 2012
  8. Options12

    Options12 Guest

    The 605 reports would probably be the better report for comparing quality of fills.

    The 606 report shows venues.

    IB's 2011 Q4 606 reports shows BOX as the venue which received the greatest share of non-directed market orders for options:

    6. Boston Options Exchange (“BOX”):

    Percentage of total non-directed orders…….. 4.3%
    Percentage of non-directed market orders….. 25.0%
    Percentage of non-directed limit orders…….. 3.4%
    Percentage of non-directed other orders…….. 9.1%


    http://www.interactivebrokers.com/en/general/about/brokerDealerReports.php
     
    #38     Mar 9, 2012
  9. LOLOLOL
     
    #39     Mar 9, 2012
  10. FIGHT!
    FIGHT!!
    FIGHT!!!
    FIGHT!!!!

    ---

    This is fun. IB vs... everyone else..

    Where's Tyler Durden?
     
    #40     Mar 9, 2012