Send the options order to BOX or PSE instead of SMART. Then you pay $1.75 for execution and $0.10 per modify/cancel.
The trouble with this is that sending an order directly to an exchange will increased your commissions to 1.75 per option contract compared with 0.70 via SMART.
Execution is more important than the little stuff like cancellation fees. You won't have to modify your orders that much if execution is good.
I thought that an order that was sent to an exchange but not filled would have a charge but I can only find modify charges on IBs site.
I don't think they charge you if it is not filled. If it is not filled and you cancel, it though, they do charge you. And since modifying an order is essentially a form of cancelling it, I suppose that is their logic. I agree that it would be nice if they were a little more up front about it.
The big retail brokers typically charge $9 or $10 per order plus $.75 per contract. I've been trading VIX options recently, and the contracts for the just-OOM strikes that expire in 2 weeks spend most of the day with a $.35 to .45 spread, so I tend to do a bunch of cancel-replaces. Add in the.40/contract exchange fee from CBOE that discount brokers pass on to the customer - several exchanges are now charging .40 to .45/conrract for index options - and suddenly those all-inclusive rates from Schwab, Ameritrade, or E*Trade begin to have some appeal.
I'm pretty happy with IB for stocks No one can beat their ultra-low commission for any retail customers like me... BUT IB SUCKS BIGTIME FOR OPTIONS TRADING. My first SMART LIMIT SELL @ .75 (2 contracts) was routed to PHX. I did not see the exact price action but had a feeling that it was a very inferior execution as underlying had to move a lot before my order got fill. Then I placed another SMART LIMIT SELL @ ASK/.80 and started watching the book-trader When I placed the order there were 100+ orders sitting at ASK; 2000+ at BID/.75 and 2000+ at next ASK/.85. After few minutes I could see only 2 at ASK. I was the last one and it did not impress me at all... So I canceled the PHX crap and placed a direct CBOE order @ .85 and got a decent fill. I was wondering about $3.50 fee until I saw this thread. My last order was a direct order so charged at 1.75 per contract. DAMN! THEIR SMART FILL (which was always PHX in my case) SUCKS UNLESS U DIRECT TO CBOE AND PAY HIGHER FEE. How can we justify this from one of THE BEST broker for stocks and futures? Anyway - I do have account at OH and I'm going to completely switch to OH for options trading. Their platform is pretty impressive, easy, fills are pretty decent and no cancel/modify fee CRAP. What else you want for $9.99 flat fee. - SU