Profit vs Commission

Discussion in 'Options' started by Gustaf, Jun 8, 2006.

  1. Gustaf


    Hi, just wondering about profit and commissions.

    I checked my account, in two weeks i made $234 in profit and spent $136 on commissions. Thats quite a lot about 58%!

    I usually trade verticals, calendar spreads and covered calls and naked puts.

    How much do you folks spend on commissions and what brokers are you using?

    I am with TOS but thinking about IB, are they good?

  2. very important ratio to keep under contol!
  3. Gustaf


    "very important ratio to keep under contol!"

    What is a healthy ratio, should i hold my positions longer or try to get lower commissions.
  4. MTE


    It is important to keep your commissions in check, but the amount one pays in commissions depends on trading style, volume and broker. You can usually negotiate a lower rate with a broker if you do reasonable volume.
  5. For me quite a bit below 20% - better below 10%.
    Getting lower commissions is always a good idea. You need to have volume to get anywhere, which is usually too risky for a start.
    When starting from a profitable system, holding your positions longer is very good but VERY DIFFICULT.
    Most of those who will comment on this don't have a profitable system at all.
  6. I asked the exact question abt three months ago. Options are more commission intensive and initially you will spend a lot but as you learn and do more volume your expense will go down. I'm shooting for less than 10% and even under 5% (with TOS) One account I have is under $40,000 so I actually trade very little but still do ok with the occasional vertical, CC and NP. 4 leg spreads and calendars are very commission intensive and you really need a big (over $100,000) acc to keep comm costs down. JMO and as MTE said don't be shy to negotiate a lower rate before you decide to switch! There are trade offs with brokers so commission should not be the only driving factor.
  7. Bullet


    A good commission rate is always an important factor if one trades actively.....but if you want to improve your trading in a big way, worry more about improving your trading rather than the commission end (unless you develop a very active style).

    Good Luck!!
  8. Gustaf


    Thanks for all the good answers, ill think I will focus on staying profitable and focus on commisions later.