I had an issue with IB yesterday. I entered an option spread order using the smart route. The NBBO going in was .48/.51. I bid .49 for 10 spreads. Their system then reflected a market of .49/.51. 30 minutes later I received a report when the underlying moved, and was charged for taking liquidity. Their explanation was that the system hold my order until it is marketable. I thought my orders were standing on the COB at one of the option exchanges. They told me I was getting bar none the BEST executions available. I said I was missing out trading with other market makers and other customers because my order was not represented at the exchange. The first representative I spoke to told me I could not direct complex orders to an exchange like the ISE. So I figured out how to do it on my own. Directed an order to the ISE, got an execution. Was charged $1.00/contract and was not given credit for adding liquidity. How is this the best, when Timberhill holds my order until they want to do one or both legs, then crosses the trade on an exchange where they enter their side first, receive payment for adding liquidity and charge me for taking, when my order was in the system first. When I asked the representative why my orders were not going to the COB, and wanted details of where it was held and who was on the other side of my trade, he repeated over and over I received the best execution available using smart route. I don't know why traders here like them so much. Between the nasty representative and COB order tickets that are tagged incorrectly debits when they are credit spreads and the COB ticket having to be rebuilt when I scale into a spread, I think they are no where's close to the best.
I think someone posted an options-specific matrix that was comparing various retail brokers. My recollection is that IB came out on top, but that was using default fees (frequently, you can manage to negotiate better fees away from IB). Simply by looking at their site, their fees look pretty competitive vs. institutional brokers with similar service level (nasty reps and semi-crappy execution is pretty much the norm across the space). What are the alternatives in your mind, out of curiosity?
My concern was more with the handling of my order, than a few dollars of commissions. I often put a few credit spreads out in AAPL just above the mid point. If my order is never represented in the market place unless their trading arm sees value, how can they say my execution will be the best. Then their rep on the phone would not answer my question, which I did ask nicely, about order handling. He made it seem like they were doing me a favor allowing me to use their system, and repeated over and over some sales pitch. I had my Roth at TD before, if they wave the ticket charge and just charge me the $0.75/contact, I'll go back. At least TOS knows what a debit and credit spread is.
Very interesting. I am in process of picking a broker for my IRA (our PB is a big and ugly bank with the minimum account size above my measly IRA) so I would love to hear what people got to say.
sle...I've traded my IRA (option spreads) at TOS since 05 and over-all am pleased. However they don't allow ES trading in IRA's...yet...they say they are working on it. Since moving to TD they are more conservative in that often if you have a BWB or unbalanced condors/flys they will charge more in margin than when it was TOS. other than that and cost its fine. I do like their freebies...platform..now they have "Tastytrade" and for the retail clients their daily swim lessons are quite informative.