My experience trading options with TDA - read & learn !

Discussion in 'Options' started by silent_tunes, Sep 25, 2010.

  1. I have Level 2 option trading previliges with TDA - meaning I can buy options, sell covered calls and cash secured puts. I cannot trade spreads or write uncovered calls.

    However, by taking a little risk I was able to "leg into" a vertical spread for a discount; the spread was already in the money. So, all I had to do was wait till expiration to exercise and collect my profit or close out the spread and collect my profit.

    But NO! TDA had other ideas. They are fine with taking commissions from me while I leg into the spread even though I do not "have permission to trade spreads". But once I am into the spread, they send me an email saying my order(s) violated my trading previleges and that I have to buy back my short positions by 2.30 pm (not even wait till end of day) or they will perform a forced liquidation of the position.

    I was doing a simple bear put spread for a debit with only 2 legs (long the upper strike and short the lower strike). For the life of me, I cannot understand how this is any different in risk profile from selling cash secured puts.

    In any case, TDA is dishonest enough to gladly take your commissions when you place "orders that violate your approved trading level" and force you to exit your position (even if it costs you money) so that they can scoop up more commissions on the exit trade.

    I have seen Wall Street scum and this is it !! I had to vent .......Sorry !! And by the way, my trades on the day grossed $900 only to pay TDA $500 in commissions and I get to keep only $400 !! Go figure !!

    Paying $0.75 per contract on each leg each way (entry and exit) really adds up fast especially if you trade 100+ contracts. Must be a better solution out there somewhere......any comments ?!
  2. spindr0


    I'll repeat the suggestion I gave you on the other chain that you started:

    Do yourself a favor and find a better commission rate. Trading is hard enough to start with and that $10 base fee really adds insult to injury.
  3. rew


    spindr0 is right. Many brokers charge lower commissions than TDA. And make sure you're signed up for whatever sort of option trading you want to do, don't make a trade you agreed not to do and then complain when you're forced to exit it.
  4. stoic


    I agree with rew. The brokerage industry is highly regulated. The broker is required to perform due diligence for customer suitability when it comes to options. I have seen too many customers allowed to trade in complex options strategies and then the customer complains since they lost money, and the broker shouldn't have let them do it.

    You knew your option trading level, and what you are allowed to do. Don't think you can leg into it, and get away with an account violation, then come in here and say it was another case of Wall St. scum.