Option spread execution

Discussion in 'Options' started by RedDuke, Oct 4, 2011.

  1. RedDuke

    RedDuke

    Hi FSU,

    Which broker(s) would you say would be best to trade SPX options with?

    Thanks,
    redduke
     
    #31     Oct 31, 2011
  2. FSU

    FSU

    I don't think I know enough to give you advice there. As a smaller trader if you are doing spreads you would probably want a broker who routes the spreads to the COB. Each broker is different on what size and types of orders the send directly here or to a broker first. That being said, I have seen brokers fill orders that would not have been filled in the COB. Interactive Brokers have their own brokers in this pit. Other firms may have their own broker or send their orders to a broker who represents many firms.
     
    #32     Oct 31, 2011
  3. RedDuke

    RedDuke

    Hi FSU,

    I currently trade with IB, and planning to start trading SPX with them for now, just looking at cheaper alternatives without sacrificing the service.

    Thanks,
    redduke
     
    #33     Nov 1, 2011
  4. tman

    tman

    Working 2 identical orders in SPX and SPXPM.

    Sell iron jan 925/950/1400/1425 iron condor @ 3.80.

    Interesting to see which, if any, get filled.

    I trade w/tos.

    Edit: SPXPM marking 3.45

    SPX marking 4.05 (which means every little)
     
    #34     Nov 1, 2011
  5. FSU

    FSU

    I think you will have a tough time beating IB for price. TOS might be a bit easier to use, but they are also more expensive. I dont think TOS adds exchange fees to their option trading prices, while I believe IB does, so if you are trading in the SPX the commissions may be closer between the 2 (SPX charge fairly large exchange fees as it is single listed)
     
    #35     Nov 1, 2011
  6. RedDuke

    RedDuke

    IB charges around $2.5-$2.8 per round trip.

    Let's say I want to execute 3 iron condors, the cost will be about $30.

    I found brokers, and one of them has the following fee structure $12.5 for up to 400 options plus 0.15 for each option. The above trade would roughly cost 1/2 of what IB charges.

    Like you said, IB has their own people in the pit, so may be the execution is better.

    Trying to figure out, who would be best for execution/price.
     
    #36     Nov 1, 2011
  7. FSU

    FSU

    Check to see if your .15 a contract broker includes exchange fees. My guess is it doesn't. If thats the case add about another .45 a contract for SPX exchange fees.
     
    #37     Nov 1, 2011
  8. RedDuke

    RedDuke

    You were right, it is 0.15 plus 0.35-0.45, still a lot cheaper. Love IB and will continue trading futures through them, but will look elsewhere for options.
     
    #38     Nov 3, 2011
  9. IR_Trader

    IR_Trader

    TOS appears to be cheaper.

    Here's what I just found out using the following model trade:
    Iron Condor trade for 25 contracts of SPX (this equates to 2 credit spreads, so 4x25=100 contracts total to enter the trade).

    IB: Using the IB paper trading system, I was charged $107.13 for the trade. They charge $.7 per option contract, and then another $.44 per contract for the SPX CBOE trade (25*4*(.7+.44) = $107.13). I confirmed with a support agent that the paper trade is the exact same pricing as a real trade.

    TOS: Using the TOS paper trading system, I was charged $159.95 for the trade ($9.95 flat fee + $1.50/option contract). However, after reviewing the charge with a TOS support agent, I was told that the paper platform charges use the old fee structure, and that the real trade would actually be computed using a $.75/option fee. So: $9.99 + (25*4*.75) = $84.99


    There you go. TOS is $84.99 vs. IB at $107.13 for the same Iron Condor SPX option trade.

    Would love to hear what others have observed in practice w.r.t. IC fees on either IB or TOS for SPX trades.


    References:
    * www.thinkorswim.com/tos/myAccounts/displayRates.tos#
    * www.interactivebrokers.com/en/p.php?f=commission#
    * individuals.interactivebrokers.com/en/accounts/fees/CBOEoptfee.php?ib_entity=llc
     
    #39     Mar 1, 2012
  10. FSU

    FSU

    TOS option fees are "all in" They don't add more for exchange fees like most brokers. So if you are trading proprietary products such as VIX SPX OEX which charge exchange fees, you get a savings vs trading these products with IB.



     
    #40     Mar 1, 2012