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By Azov
Just wondering if anyone has ever had success negotiating with TOS to reduce/remove the $19.95 fee that TOS charges for assignment and exercise. If so, what kind of arguments worked best?
I agree with Kim that we shouldn’t have to negotiate to get the best rates. However, I greatly prefer TOS’s platform to anything else out there. I’ve been using tastyworks for a while now too, and their platform is only ok, but it’s still a work in progress, and they still charge $5 for assignment/exercise.
The reason I’m asking - and not considering IB’s $0 assignments- is because I’m evaluating a couple of candidates for wheel trades (sell puts, get assigned, sell covered calls, get assigned, rinse/repeat). Since the cycle involves two assignments, the $40-ish total fees at TOS is cost prohibitive. And I refuse to use IB because of their auto-liquidation algorithm - I don’t want to have my account blown up if I get assigned on a couple of different positions one night and don’t have a chance to close things out within 10 minutes of the market opening.
So if I could get TOS to come down or eliminate their assignment fee, that would be great. Otherwise I’m stuck with TW - I suppose I’ll get more used to their platform over time, but everything about their apps makes me feel like I’m playing an arcade game from the 80s. And not in a good way....
Any input is greatly appreciated!
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By Kim
The impact of commissions on your results can be astonishing.
This excellent article by Business Insider is asking the right questions (and also answering some of them):
When you pay commission fees for online stock trades, where does that money go? Do you get better execution by paying $9.99 to TD Ameritrade than by paying $1 to Interactive Brokers? How much better? Enough to justify the difference in price?
Their conclusions:
At least 17 million investors overpaying for online brokerage Only 12% of commission fee is used for trade execution at top brokerages Over $1.8 billion per year wasted on unused premium services Lets analyze one specific month, January 2015, and see how different commissions structure can impact the returns of our SteadyOptions model portfolio.
SteadyOptions $10k model portfolio traded 228 contracts in January. If you paid $0.75/contract with no ticket fee, you spent $171 on commissions, which is 1.7% of your portfolio value. While not cheap, but considering the fact that we produced 20.7% ROI in January (12.4% return on the whole account assuming 10% allocation), it is completely reasonable.
However, if you had a ticket fee of $8, in addition to $0.75/contract, you would pay $427 in commissions, more than double. In this case, your returns will be reduced by 4.3%.
This will make HUGE difference in the long term. To see how huge, I went to pro-trading-profits.com, a third party website that tracks performance of 400+ newsletters. I clicked on SteadyOptions performance report and played with different parameters. Using the $0.75/contract with no ticket fee, a $10,000 portfolio would produce $35,693 gains since inception. Adding $8 ticket fee to each trade would reduce the gains to $23,869.
The impact of the ticket fee is especially significant if you have relatively small account.
Of course commissions is only part of the whole package. Other factors include tools, platform, customer service etc. Barron's publishes a comprehensive brokers review every year. Here is the last one. Interactive Brokers (IB) was ranked #1 by Barron's third year in a row. This is the broker I personally have been using for the last 7 years and I'm very happy.
Barron's mention that "IB offers a lot more support to new clients, including individuals, especially those with larger accounts. Yes, using the word "support" in the same sentence as Interactive Brokers (without the modifier "dismal") is a change for us, but the firm has clearly made this a point of focus."
Their conclusion:
"Interactive Brokers continues to have extremely competitive pricing, and the lowest margin fees of any broker in our survey. You may incur some data fees, but the firm takes care of any options-exercise costs, which can generate unexpected fees at many other brokers."
On the open section of our forum, we have couple very useful discussions about brokers:
Brokers and commissions
Interactive Brokers tips, tricks, webtrader etc.
There is a consensus among our members that IB and TOS by TD Ameritrade offer the best combination of commissions, platform, and execution. If you decide to go with TOS, I highly recommend that you negotiate a commissions structure that does not include a ticket fee.
Here are couple more good articles worth reading:
The Truth Behind Broker Commissions - Learning Markets
Comparison of online brokerages in the United States
Relative Importance Of Options Brokerage Fees
For Canadian traders, here is an excellent study on the commissions schemas offered by Canadian discount Brokers.
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By asteroids
I am wondering if anyone ever used or still uses the spread hacker in Thinkorswim. When they say this particular vertical spread or calendar has 70% chance of winning for example, how accurate is that and can I trust it?
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By Kim
Options Trading is a business. As in any business, there are costs. One of the major costs is commissions that we pay to our broker (other costs are slippage, market data etc.)
While commissions is a cost of doing business, we have to do everything we can to minimize that cost. This is especially true if you are an active trader. The impact of commissions on your results can be astonishing.
This excellent article by Business Insider is asking the right questions (and also answering some of them):
Click here to view the article
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By tjlocke99
Hello. I have a few questions/comments about backtesting in TOS.
1. If you select that you entered a trade in TOS using the thinkback tool, is the price you enter supposed to be based on the opening price for legs in the options spread for that day?
2. When you close the trade does thinkback assume you are getting the mid of closing price for the legs in the options spread that date?
3. Is it the closing price for the underlying that day?
I always assumed it was based on closing prices, but I just wanted to check.
Also, I see this as a major issue with backtesting in TOS, you can only base it on whatever open/close condition it uses.
Thank you!
Richard
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By Mikael
Background
In Jeff Augen's Volatility edge, he often used a standard deviation plot to look for spikes. He also discussed it in managing basic option positions and using price spikes as triggers to enter. (it starts on page 113 of the actual book if you are interested in reading it). I post a brief synopsis below (straight from his book, because i have the eBook version).
The Mechanics of the Std Dev Study
The following is directly from the book, to give a better idea on how he came up with the idea of this study.
The ToS Script
To turn on this study you have to go to ToS program > Charts > Studies > Edit Studies > New > thinkscript editor and paste the following code in. Then just save it as whatever you want to call it and add it to studies on lower subgraph.
Credit to this guy who wrote the script:
http://www.thinkscripter.com/indicator/standard-deviation-price-change
# Tom Utley 3-17-2009
# Thanks to Jeff Augen
# Price Spikes in Standard Deviations
declare lower;
input length = 20;
def closeLog = Log(close[1] / close[2]);
def SDev = stdev(closeLog, length)* Sqrt(length / (length – 1));
def m= SDev * close[1];
plot spike = (close[0] – close[1]) / m;
spike.setPaintingStrategy(PaintingStrategy.HISTOGRAM);
spike.AssignValueColor(if close > close[1] then Color.UPTICK else if close < close[1] then Color.DOWNTICK else GetColor(1));
This is how it looks like in ToS live
Example with AAPL Aug monthly 470 Call
Possible Entry on greater than 2 STD downspike
Possible Exit on spike 25 minutes later (or set your own p/l% with a limit order)
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By tjlocke99
I keep thinking I am missing something but I think TOS thinkback may have some major defects.
Take a look at ABT (Abbott Labs) "Last" price on 7/10/2012: 65.67
Then TOS thinkback says for 7/11/12 "Last" 65.18, Net Chng, +.02
This VERY wrong. 65.67 to 65.18 represents a decrease in price NOT a +.02.
Am I missing something?
Thanks!
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