Zero commission brokers

[Ringandpinion 1,657]

TANSTAAFL  -  There Ain't No Such Thing As A Free Lunch   I always wondered about how the zero commissions brokers survive on so much less than the others.  This article is very interesting and while certainly not a proven point, does make one wonder.  That said, I have an account with Tradier and love their zero commissions for certain kinds of trades.  Because that account is much smaller than my regular trading account, I often will split quantities of the same trade between Tradier and TDA/Schwab, and I've seen comparable fills across both.  So I would say this article just reminds one to stay vigilant when something sounds too good to be true.

https://www.wsj.com/finance/investing/robinhood-touts-rock-bottom-fees-for-options-trading-then-come-the-hidden-costs-8d745bd8?reflink=desktopwebshare_permalink

[luxmon 233]

I just peaked at a trade confirmation from Tradier as they sent a note a while back about increasing "misc" fees for the no-cost option trades they offer for $10 / month.  For equity options it looks like they are now up to around 0.14-0.15 contract between the "Tran Fee" and "Add'l Fees" they tack on.  Last time I looked it was around 0.09.  For comparison I pay 0.30 / contract at Schwab with much less hassle and a better mobile platform.  Time to re-think these free brokers.  

[krisbee 1,964]

25 minutes ago, luxmon said:

I just peaked at a trade confirmation from Tradier as they sent a note a while back about increasing "misc" fees for the no-cost option trades they offer for $10 / month.  For equity options it looks like they are now up to around 0.14-0.15 contract between the "Tran Fee" and "Add'l Fees" they tack on.  Last time I looked it was around 0.09.  For comparison I pay 0.30 / contract at Schwab with much less hassle and a better mobile platform.  Time to re-think these free brokers.  

With Tradier, I just checked mine for yesterday's transactions. Noticed the transaction fee is 3 cents  for "BUY" options and for "SELL" it is 8 cents. Overall for me the Fees is around 11 cents for BUY and 17 cents for SELL per contract (Transaction + additional fees) for regular stocks. I trade SPY & VIX as well, those are costly. I find the tradier website is good enough for doing complex multi leg orders. Haven't used the app though. Only drawback for me is, with website when I'm on mobile it timesout pretty soon. 

 

[luxmon 233]

Yeah I just checked some singles on NFLX from last Friday and it was similar (0.11 for buys to 0.15-0.16 for sells).  SPY for me was similar but obviously the index options SPX & VIX tack on their passthrough exchange fees. 

 

I used to do a very cheap pre-earnings calendar play on TWTR 6-7 years ago where'd buy a 1-week calendar for 0.04-0.05 and sell it for 0.08-0.09 in the same day (or same hour) in 100-200 lots at a time, multiple times per cycle.  (Often multiple times a day until the broker said I ran out of cleared cash ha ha).  Back then it was 0.04-0.05 fees per contract and it makes a big difference on returns for these types of trades when considering round trip "misc" fees. 

[ex3y7s 149]

I find a decent way to think about this is the cutoffs where saving a penny on the execution makes up for the extra commission. For example IBKR is 0.65/contract, so if we assume Tradier is 0.15 per contract, here's how much better of a fill you'd need to get on IB to make that up:

• Single option: 0.01 (would save you 0.50: 0.01 * 100 - 0.50)
• Two-leg: 0.01 (same cost)
• Four-leg: 0.02 (same cost)

If you feel the fills are equivalent, you can save a significant amount using a discount broker, however if the fills are even slightly worse, the discount evaporates quickly. Personally, I use both Tradier and IBKR, tending toward IBKR for "weird" orders (like 3:2 ratios) and more expensive contracts like the double diagonals; I've found IBKR tends to make up more than the $0.02 on a $10 spread. On a $0.90 calendar, it does not.

 

I agree with krisbee that Tradier's web interface is fine—their desktop app is hot garbage IMO and I'd rather use the website. Mobile app is also pretty bad and I tend to just use the website on mobile as well.

Edited September 24 by ex3y7s
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[krisbee 1,964]

7 minutes ago, luxmon said:

Yeah I just checked some singles on NFLX from last Friday and it was similar (0.11 for buys to 0.15-0.16 for sells).  SPY for me was similar but obviously the index options SPX & VIX tack on their passthrough exchange fees. 

 

I used to do a very cheap pre-earnings calendar play on TWTR 6-7 years ago where'd buy a 1-week calendar for 0.04-0.05 and sell it for 0.08-0.09 in the same day (or same hour) in 100-200 lots at a time, multiple times per cycle.  (Often multiple times a day until the broker said I ran out of cleared cash ha ha).  Back then it was 0.04-0.05 fees per contract and it makes a big difference on returns for these types of trades when considering round trip "misc" fees. 

Sample trades from 2018. I see Transaction fee was 4 cent and Additional fee is around 5 cents, so 9 cents for BUY and 11 cents for SELL. Now Now it is 11 for BUY and 17 for SELL.

If you see the Additional FEES is combo of "Interest" + STTax. I think the Interest Rate hike has effect on the Additional fee increase. 

[allinadayswork 21]

@luxmon

thanks for the info re brokers hidden fees, though is no surprise.

old traders joke; know why they're called 'brokers'?

because the more you use them, the broker you get.

everything is relative of course, but i still remember the first online trade i transacted.

with schwab, who at the time was a true discount broker, compared to all the other pirates, i mean brokers.

some 30 years ago, $39, for 100 shares, both ways. at the time it was dirt cheap, relatively speaking. and convenient. i was living in high cotton, trading from my  desk, at home, drinking ovaltine.

in comparison, broker-assisted were still charging hundreds or thousands, for a single trade. depending on volume. schwab really put the hurt on brokers. what a pity😂.

however, commissions are very important to an active trader, and there has never been a free lunch, anyone says different is selling something.

you mention you use schwab and your rate is .30 per contract? would you mind sharing what volume that entails?

since the tda/schwab debacle, they don't play very nice and have been giving me the run around b/c i requested .25.

but my recent fills on tos are garbage. gonna close the schwab account and just use my other brokers if they don't change their tune...soon.

[Ringandpinion 1,657]

It looks like that the no commissions brokers are a little better sometimes, which is pretty much what I found.  I trade mostly with Thinkorswim and I'm very comfortable with it after all these years.  Unless I have a specific trade that is a lot better on Tradier, I'm not sure it warrants the complication.  So, for now, the vast majority of my trades will be through TOS, but keeping that little account open at Tradier will allow me to see if I can better my costs there. 

In 2021 and part of 2022, I did a lot of non earnings hedged straddles, the trades were making good money for a while, till the market changed.  But a 4 legged trade with at least one 4 legged modification and a 4 legged exit would have reaped good commission benefits on Tradier.

The moment the fills aren't as good changes the whole game though.

[luxmon 233]

Just to close out my comment on Tradier vs. Schwab - Schwab does also have misc fees but they are quite a bit less (0.01 for buys and 0.04 for sells).  Here's the same NFLX contracts as I posted above from Tradier:

The key point is it is becoming much more close between free brokers and regular brokers.

 

[greenspan76 332]

The way I understand it, if your statement shows $0 in the "COMM" field, that means Tradier isn't charging you anything. All the fees in the "Tran Fee" and "Add'l Fees" columns are pass-thru regulatory fees that are the exact same fee every broker pays to the regulators, whether they charge you a commission or not. Tradier lists all the fees on their website, but you can go to each agency and verify the fees yourself if you want. The fees are:

$0.0775 / contract (max $15) Clearing fee paid to CME/ICE
$0.00279 / contract Trading Activity Fee paid to FINRA
$0.02815 / contract Option Regulatory Fee paid to the exchanges (but collected by OCC)
$0.0000278 / $ on sales only SEC regulatory fee

 

The only thing I don't understand is it appears the clearing fee is sometimes less than $0.0775, but I have been assuming it has something to do with spreads being charged differently

[trhanson 590]

I use Robinhood, because I'm a scrub (actually, I just had a lot of my investing money there since I've had the account forever).  Fees there are just pass through fees for the exchanges.

 

Just opened 4 units of a DD.  Fees were 0.48 for the whole trade which is .03 per contract.  

[luxmon 233]

18 hours ago, trhanson said:

Just opened 4 units of a DD.  Fees were 0.48 for the whole trade which is .03 per contract.  

.03 per contract is 5X cheaper on fees than Tradier which averages about 0.14/0.15 per contract on spreads now.

[luxmon 233]

Luckily I've been moving my operations to Schwab.  This has been happening multiple days this week near the open and is completely unacceptable.  

[Chuck451 310]

21 minutes ago, luxmon said:

Luckily I've been moving my operations to Schwab.  This has been happening multiple days this week near the open and is completely unacceptable.  

I've been using Schwab forever, and inevitably when I think of moving to a lower cost broker, I see something like this posted.

FYI, I have been able to negotiate my price per contract down to .35.  To those that want to know how, I just contacted support through TOS and asked who I needed to talk to negotiate it, and they handled it right there in the chat.  You'll need to know your number of contracts that you've traded and your anticipated number of contracts per year.  It took about 2-3 weeks to see the discount.

 

[JerryJet7 27]

Anyone tried Public.com yet?   I'm going to place a few orders there to get a feel of the platform.  After today's Tradier issue I've had enough.

[greenspan76 332]

On 10/1/2024 at 2:34 PM, trhanson said:

I use Robinhood, because I'm a scrub (actually, I just had a lot of my investing money there since I've had the account forever).  Fees there are just pass through fees for the exchanges.

 

Just opened 4 units of a DD.  Fees were 0.48 for the whole trade which is .03 per contract.  

I've avoided RH because of the issues they had during the Gamestop frenzy a few years ago, but I noticed they currently have a 3% match with no limit on ACATS from IRAs and I'm seriously considering moving my IRA assets there for that deal. You have to maintain RH Gold for 1 year, but that's just $60 total, so if you have substantial IRA assets, the only problem I see is the 5 year earn-out period. But for me, the IRA is just buy-and-hold investments in stocks/ETFs, so I may do it anyway. On that note, they're also doing a 2% match on ACATS when your transfer includes a $10k+ margin balance, which I don't normally mess with, but could do a few weeks just to get a bigger bonus on the transfer. I don't think that's enough to tempt me to move my option trading to RH, but it might be for some so I thought I'd mention it.

[luxmon 233]

1 hour ago, JerryJet7 said:

Anyone tried Public.com yet?   I'm going to place a few orders there to get a feel of the platform.  After today's Tradier issue I've had enough.

I wasn't aware of that brokerage.  In reading their rebate terms, I was surprised to see the PFOF kickbacks these brokers get are quite significant (0.36 per contract).  At least this one gives you half of if provided you trade enough volume.  There's got to be some hidden price to pay in execution slippage that probably wipes this savings out.

[ex3y7s 149]

5 hours ago, luxmon said:

I wasn't aware of that brokerage.  In reading their rebate terms, I was surprised to see the PFOF kickbacks these brokers get are quite significant (0.36 per contract).  At least this one gives you half of if provided you trade enough volume.  There's got to be some hidden price to pay in execution slippage that probably wipes this savings out.

The rub with Public is that they don't allow many complex options strategies, so you wouldn't be able to use it for anything diagonal in nature (like DD's), and if you wanted to do an iron condor you'd have to leg in (not sure if they'd require separate margin for each side—I'd imagine so based on their software). I have an account with them but declined to fund it once I discovered their restrictions, so I can't comment on the execution.

[falkor 254]

On a related topic, how do exchanges which liberally pay out rebates make their money? I notice in IBKR there are certain brokers that seem to consistently yield negative comms (i.e., credit rebates) even when hitting the bid/offer (taking liquidity). Why would any exchange do this?

[speedythewarthog 32]

I've been using Public to do earnings trades for a couple weeks (including double diagonals). Their spread trading features might still be in beta (they gave me early access when I requested it), and there have been some growing pains, but their platform seems to generally be quite stable. The word is still out on execution quality. At least once I couldn't get a fill on Public but then tried the same order on tradier and got an instant fill, but the orders were not open at the same time so it's possible timing factored in. They should be sending things to the same exchanges any low-cost broker would prioritize, so I wouldn't expect a huge difference to tradier there, but I know one thing that can make a big difference at times is which liquidity providers they sell most of their order flow to. Each broker usually has their own list of providers and priorities within the list. You can look up the data in their filings but they may still be finding their footing in that area since they are pretty new. Usually, you can tell your order was internalized with a liquidity provider when it is instafilled, vs sent to the exchange and sits open on the orderbooks. Different list of liq providers can lead to orders filling right away on some brokers and not on others, but it wont necessarily always be better on one broker vs another.

[krisbee 1,964]

What does your portfolio view shows in Tradier? I see the below. 

[JerryJet7 27]

Same - all my positions just disappeared but orders are still there

[ex3y7s 149]

3 minutes ago, krisbee said:

What does your portfolio view shows in Tradier? I see the below. 

Same. Tradiers gonna Tradier. Hope they didn't just drop their entire positions database.

 

Edited October 18 by ex3y7s

[alwaysprepared 32]

1 minute ago, krisbee said:

What does your portfolio view shows in Tradier? I see the below. 

Mine shows the same...

[Bull3t007 143]

9 minutes ago, krisbee said:

What does your portfolio view shows in Tradier? I see the below. 

Same on my mobile application and the Dashboard. Must be a glitch but hope they resolve it soon….

Edited October 18 by Bull3t007

[Ringandpinion 1,657]

Are you positions viewable on Apex?  When I had my Tradier account, I used the Apex login to look at my trades.

[krisbee 1,964]

2 minutes ago, JerryJet7 said:

but orders are still there

Fortunately I have the habit of placing exit orders with limits as soon as I enter. I opened many positions that expires today. For example NFLX call credit spread, spy call credit spreads. 

[luxmon 233]

wtf

[JerryJet7 27]

yikes

[rvsts 41]

I had exit orders too, but those had me in a panic because having no positions made those all naked shorts which in turn made my Buying Power numbers look insane

Glad I'm not the only one though.

[Buck H 60]

I guess we will all be looking a lot closer for a better broker to trade with.

[Skylimit 27]

I hope our money is safe. I took a screenshot of Tradier summary page as a precaution.

[luxmon 233]

Tried calling but there's no one home.  I have bots running on OptionAlpha that are tracking positons but orders sent are being rejected.  The forums are lighting up there too and someone who got through said the rep "thinks" the orders might be getting through.  What a joke.

 

 

Chris from Tradier actually posted over there directly telling us what everyone already knew.  

Edited October 18 by luxmon

[krisbee 1,964]

Check this URL

https://status.tradier.com/

Not sure why there is no incidents reported for this week (prior to today). 

[Bull3t007 143]

3 minutes ago, krisbee said:

Check this URL

https://status.tradier.com/

Not sure why there is no incidents reported for this week (prior to today). 

Were there other incidents this week? 

[krisbee 1,964]

Just now, Bull3t007 said:

Were there other incidents this week? 

Not sure if you followed yesterday's conversations. First 15 mins (at least), all the orders were in PENDING status. We experienced that 2-3 times this week when the market opened. 

 

[Buck H 60]

2 minutes ago, Bull3t007 said:

Were there other incidents this week? 

Yes, yesterday morning right after market opened.  Could not make changes on nflx sell order until after it dropped more than a dollar.  Others had issues too.

[luxmon 233]

15 minutes ago, krisbee said:

Check this URL

https://status.tradier.com/

Not sure why there is no incidents reported for this week (prior to today). 

That is very disingenuous not to have the other outages posted that prevented people from trading.

[aircal 1]

Have trading friends that love Tradier but as I keep reminding them, ain't nothing free.

I had two Tradier accounts and closed them both - often I had to pay up $1 to get a fill, negating the cheap commissions. And then there are days like today...

[Bull3t007 143]

29 minutes ago, aircal said:

Have trading friends that love Tradier but as I keep reminding them, ain't nothing free.

I had two Tradier accounts and closed them both - often I had to pay up $1 to get a fill, negating the cheap commissions. And then there are days like today...

I did some testing with Tasty Trade. On some trades Tradier filled easier and others Tasty. About 50/50 so I think that is a non issue. I used the exact same contracts and quantities at the exact same time. 

However the outages are a valid concern I agree. 

[luxmon 233]

Update from Tradier:

[Bull3t007 143]

Balanced API seems to display the correct info again. Positions api still not functioning. 
 

edit: positions back online but working improperly 

 

Edited October 18 by Bull3t007

[luxmon 233]

I can see my positions now EXCEPT ones expiring today.  

[krisbee 1,964]

3 minutes ago, luxmon said:

I can see my positions now EXCEPT ones expiring today.  

I see the positions as open that I already closed this morning. Surprisingly I see yesterday's expired option on SPY is still open today. May be it's still not fully recovered. 

[Buck H 60]

It's definitely not working properly yet for me.

[luxmon 233]

4 minutes ago, krisbee said:

I see the positions as open that I already closed this morning. Surprisingly I see yesterday's expired option on SPY is still open today. May be it's still not fully recovered. 

Yeah I think they're still working on things. There's chatter at OA that they're busting 0DTE trades opened today that were still open at the time the outage started.  I can see some weird phantom orders for SPY in Tradier Pro that I didn't place, but the quantities were equal to the iron flies I had opened.  

[Kyle139 15]

I'm seeing weird orders as well that are not from my account. Positions that I closed today are back, and I'm showing a bunch of 0 DTE options from yesterday showing up. Pulling Orders from their API is returning data from yesterday. It's almost like they rolled back a backup from yesterday or something trying to fix this.

[CJ912 136]

I also see some weird orders. The positions I closed this morning seem to be back. Hopefully, they manage to sort this out. I'm keeping their orders open, but they look odd and I would be tempted to cancel them, just don't want to mess with their work.

[Kyle139 15]

Just now, CJ912 said:

I also see some weird orders. The positions I closed this morning seem to be back. Hopefully, they manage to sort this out. I'm keeping their orders open, but they look odd and I would be tempted to cancel them, just don't want to mess with their work.

I tried to cancel them and nothing happened. 

[CJ912 136]

They seem uncancellable indeed