Brokers and commissions

[cwerdna]

^^^

I don't know but http://www.interactivebrokers.com/en/p.php?f=minimumDeposits mentions a $10K min deposit to open an individual account.

I think from http://individuals.interactivebrokers.com/en/pagemap/pagemap_login.php, I had to select either Finish an Application or Account Management. II think there were a bunch of funding choice on the left side (e.g. ACH to IB from your bank, IB doing the ACH, wiring, etc.)

[Thaze]

Im at the exact same area. I went into account management and selected "finish an application" and now I'm currently on the 3rd step, funding. Which option did you select? I was just going to do the ACAT service option. I have enough liquid cash in my account to meet the minimum deposit amount, but I dont want to go through the issues with my stocks and other positions being in complete limbo in the mean time. Is there a way to do the micro deposits before I undergo the ACAT? I'd like to go ahead and get that stuff out of the way if there is. If not, I'll have to liquidate my positions before transferring for peace of mind.

Edited July 21, 2012 by Thaze

[guarneri]

I think micro-deposits are done when you setup an ACH account at IB. So, basically go to account mgmt, select funding, deposit funds, and setup an ACH initiated at IB. Enter your bank details etc. It will then do two micro-deposits to your bank, which you will then verify after coming back to Account mgmt. Once bank is verified, you can do cash transfers using ACH, initiated at IB.

Note that IB will withhold your ACH transfers for 4 business days after receiving them - so you won't be able to use those funds for 4 days. So, just plan accordingly.

Edited July 21, 2012 by guarneri

[cwerdna]

Sorry, I think the UI/portions are accessible change after the account's been funded.

I know it wasn't that straightforward for me. I originally started and had to delete my 1st ACH attempt (would've needed me to push an ACH from my bank via a goofy method to IB). I then had to add the bank account info on IB to initiate the microdeposits.

There ought to be a way to do ACH before ACAT since I didn't do ACAT at all and have no plans to.

[Thaze]

Thanks guys. I'll see what I can come up with and let ya know how it turns out. Appreciate the help.

Edit: Finally initiated the ACH transfer to begin the process, I'll try to keep this up to date on the process for anyone else interested in potentially switching.

Edited July 22, 2012 by Thaze

[Thaze]

Have been looking over the demo version while waiting for the account to be approved and it seems quite overwhelming. I'm used to much more user-friendly UI's and this is definitely not one from what I've experienced so far. Wish someone could come out with a UI as user friendly as OH with the fill capacity of IB. Looks like I've got a lot to learn before I even consider trading with this account.

Edited July 23, 2012 by Thaze

[cwerdna]

Another note re: IB: this was at the bottom of an email I received from IB today.

(1) If you funded your account with an ACATS transaction, you will have limited trading access on your posted assets until delivery is made, usually within three (3) business days. You can monitor the status of the transfer using the View Transaction History screen, located in the Funds Management section of Account Management.

Side question re: IB: Is anyone willing to report whether they receive significant income from their "Stock Yield Enhancement Program" (http://www.interactivebrokers.com/en/p.php?f=shortableStocks&p=stockYield-default) and how often they end up with payments in lieu instead of qualified dividends? I'd never heard of any brokerage doing this before, but it sounds enticing for a bit of extra income on the side...

[Xfanman]

I've filled out the IB applications up to the funding level also but I need to wait for a slow period to close out my positions in OH before I can change over. I'm curious to how you find the IB platform to trade. I downloaded the demo versions of their iPad and iPhone apps to play with this week.

[Kelly Park]

No wonder my ears where burning this weekend. That was some heavy conversation for a Saturday. Y'all seriously need to do more fishin'.

Seriously, I hope pgrace is still reading this forum, even if not posting, because I understand his frustration, as do all IB users. The exchange fees are a pain, especially their unpredictability. But I went through my commissions and they are starting to come down and the average is dropping. I don't know why, but at first I was getting many 1.17 contracts and a few 0.96s, never at 0.70 to 0.75. Now I am getting more 0.70 to 0.75 and a few below that (so liquidity rebates must have been applied). I have been with IB for about a month now and my average cost has dropped from over a dollar to about 0.92. Since my later trades have been cheaper, the average should keep coming down some more. So, some of it may have been just luck. My orders have not changed.

Based on IB customer service advice, I have changed my Global Configuration to Highest Rebate, instead of SMART. I have not noticed any change in the fills I'm getting and since commissions vary so much, there is no way to know if it has affected commissions or not. But I'll stick with IB for now. It is nice to not have a per trade fee, so I can make smaller trades while I am still learning the SO strategy. When I feel comfortable scalling up my trades, I'll re-evaluate commissions.

[Xfanman]

Ok I began the fund transfer process from OH to IB. Hopefully by the end of next week my IB account will be funded and I can start making trades again.

[spunkymonkey]

Does anyone know of any discount brokers in Canada where I can use my RRSP funds? Most brokerage firms charge astronomical fees for options trading here.

[mcmatterson]

Does anyone know of any discount brokers in Canada where I can use my RRSP funds? Most brokerage firms charge astronomical fees for options trading here.

Do a search to be sure, but I don't believe it's permissible to do the type of trading we do here in registered (RRSP/TFSA) accounts. I believe only outright call purchases are allowed, though again, check with the CRA to be sure. I use IB and Optionsxpress.ca in taxable accounts.

[spunkymonkey]

Thanks mcmatterson... you are right about the limited types of options allowed with an RRSP account. After doing some research I found that you can buy calls and puts, but not sell them. I will check out IB and Optionsexpress.ca!

[Xfanman]

So I moved some money over to IB to open an account there and left a little in OptionsHouse just because I like the platform and I didn't want to close the account out yet. I called them last week to make sure I wouldn't run afoul of the PDT rules since I wouldn't have more than 25K in that account for now and they say, "Oh no, no problem, you'll still be able to trade in your account.". I log in this morning to a nice PDT Margin Call notice. I call their customer service back up and they tell me they can reset it but of course that won't happen until tomorrow! I wouldn't be so frustrated except that I proactively called them to specifically prevent this from happening. I know missing one or two trades isn't the end of the world but GMCR looked pretty attractive this morning

/Rant Off

[Rogers]

got my TOS account switched to $1.25/contract, given that I will probably stay put.

[Guest listolyman]

got my TOS account switched to $1.25/contract, given that I will probably stay put.

Great. What are the min requirements for the $1.25/contract? I am in discussion with Ameritrade and it seems to be highly subjective. The agent told me that a recent client with $700k and trading over 500/contracts a month only received $6/trade +.75/contract

[Rogers]

Great. What are the min requirements for the $1.25/contract? I am in discussion with Ameritrade and it seems to be highly subjective. The agent told me that a recent client with $700k and trading over 500/contracts a month only received $6/trade +.75/contract

no idea. I don't think the account size is that important to them, just the volume. I do trade a lot so that might factor into it.. I just put a "worth a try" support ticket in expecting it to be rejected.

Make sure you emphasize that your are looking into switching brokers and that you hate the etrade baby..

Edited July 30, 2012 by Scott Rogers

[Guest listolyman]

It sounds like i need to be an existing customer and pay excess fees for a while to be considered for the lower rate.

[Marco]

Well I suppose if you can show them a yearly statement from another broker with $10k commission on it they don't mind that you are a new customer (no clue what no they need for what rate)

[Jesse]

My suggestion for TOS is to go to thinkorswim.com and chat with the guys at the trade desk. I believe their rule of thumb for $1.25/contract is 1500 contracts per month. At 5000 contracts per month I know they will go down to $.85/contract. They will also match trade king at $.65/contract and $4.95 per leg. Don't believe there is a minimum volume requirement for that one.

[cwerdna]

My suggestion for TOS is to go to thinkorswim.com and chat with the guys at the trade desk. I believe their rule of thumb for $1.25/contract is 1500 contracts per month. At 5000 contracts per month I know they will go down to $.85/contract. They will also match trade king at $.65/contract and $4.95 per leg. Don't believe there is a minimum volume requirement for that one.

Wow. I wasn't doing 1500 contracts/month and they lowered me from $2.95/contract (TOS rates I was grandfathered into) to $1.25. One of my friends was doing $500+/month in commissions w/TOS and he got it down that low. I was doing $700+/month in commissions.

I do have a lot of assets (in the hundreds of thousands of $) w/them across my TOS account, old TD AM account and a TOS IRA account.

I think listolyman is right. I think it'd be hard to argue for lower commissions if you haven't even been a customer w/them.

I posted a more complete story at http://steadyoptions...tes/#entry5414.

Edited July 31, 2012 by cwerdna

[Jesse]

They actually gave me the .85 rate without meeting the rule of thumb. Thats why it's worth a shot chatting with the trade desk.

[cwerdna]

They actually gave me the .85 rate without meeting the rule of thumb. Thats why it's worth a shot chatting with the trade desk.

Wow! You must either do a a lot of business w/them (more than me?) or have a lot of assets.

If mine were $0.85, I'd probably stop trading options at the IB account I opened recently or close it.

Some of IB's features like Stock Yield Enhancement (http://www.interactivebrokers.com/en/p.php?f=shortableStocks&p=stockYield-default) sound cool but I at that point wouldn't be doing enough business w/them in stock trading to even meet IB's minimums and thus have to pay for market data feeds.

[Marco]

Wow! You must either do a a lot of business w/them (more than me?) or have a lot of assets.

If mine were $0.85, I'd probably stop trading options at the IB account I opened recently or close it.

Some of IB's features like Stock Yield Enhancement (http://www.interactivebrokers.com/en/p.php?f=shortableStocks&p=stockYield-default) sound cool but I at that point wouldn't be doing enough business w/them in stock trading to even meet IB's minimums and thus have to pay for market data feeds.

As a private investor you should be able to use their 'US bundle' which is 10$ a month and free if you do more than 30$ a month commission. It has all the major US stock and option exchanges. So data feeds shouldn't be a major expense

[Xfanman]

Ok my IB account funds just showed up in IB so I'm good to go. Now to tackle the learning curve. Mosaic isn't as intuitive as OH's platform but it is set up similarly. I think I'm going to try that for now instead of their Advanced Platform unless there is a good reason not to?

[cwerdna]

As a private investor you should be able to use their 'US bundle' which is 10$ a month and free if you do more than 30$ a month commission. It has all the major US stock and option exchanges. So data feeds shouldn't be a major expense

No, but unfortunately, I've been so far taking on pretty small positions on Steady Options trades and I've not had much luck in getting fills on many of the plays. I don't think I'll be able to meet even $30/month in commissions on IB for my 1st month. I'm not sure what other plays go on here after "earnings season" is over for the quarter, but I fear I may have trouble meeting that $30 once that happens.

Prior to joining this forum, I did (and still do) sell naked way OTM puts (pretty low return, admittedly) on certain stocks that I wouldn't mind owning, using TOS. I do need to modify the orders fairly often. TOS doesn't have cancel/modify fees (unheard to me of until I found out about IB). That's strike 1 against IB. TOS also lets me close out short positions of a nickel or less for no commission. It helps reduce risk once I've taken profits and frees up buying power so I can move on. I don't think IB has that. So, that's strike 2.

Most of my trades on TOS are the above, so, it seems like they're not a good idea on IB. This feeds back into not even being able to hit $30/month in commissions.

So far, my commissions on IB haven't been outstanding vs. $1.25/contract on TOS. This isn't a weighted average, but this is what I've been paying per contract:

RUT: 1.24 (IC that I got a bad fill on because of the IB's goofy negative values and what not)

MS: 1.26 (bear put spread)

MS: 1.06 (bear put spread)

LNKD: 1.06 (bear put spread)

[Kim]

You also need to remember that they have $1 minimum per order, so if you do just one contract, that's $1 (plus the fees) and not $0.70. And they don't consider a spread as an order for commissions, they still charge per leg. However, they don't charge modify/cancel fees on spreads.

[cwerdna]

^^^

I knew about the $1 minimum, but didn't realize your other points. So, if I do a 2-legged spread w/1 contract for each leg, my commission should be $2 min (in total)? A RIC or IC of 1 contract per leg would be $4 min (in total)?

[RobertB]

Cwerdna,

No, the IB $1 minimum is per order, not per leg. A four-legged position would cost $0.70 * 4 = $2.80 (plus/minus fees).

If you're only doing small orders, you might as well stick with TOS if you're getting $1.25/contract and are happy with their service. However, IB's Smart algorithm should give you better fills since it can intelligently fill a spread on separate exchanges. And, as Kim has pointed out, there are no cancel/modify fees for spreads on IB.

Edited August 1, 2012 by RobertB

[Kim]

Robert,

Here is the response from IB:

Please note, IB commissions are .70 per order with a minimum of 1 per order.

Options commissions are charged per leg. IB doesn't take into consideration when you enter spreads. "

[artie]

Have decided on TOS based on reading info here as i'm not ready to be on my own yet with IB, even if it means higher fees in the short term. Thank you. Just noticed that TOS has a referral code box, so first person to respond here with their referral code, I'll add it in. I think you'll get $50.

[cwerdna]

Have decided on TOS based on reading info here as i'm not ready to be on my own yet with IB, even if it means higher fees in the short term. Thank you. Just noticed that TOS has a referral code box, so first person to respond here with their referral code, I'll add it in. I think you'll get $50.

It looks like I can't send referrals from my TOS account (have to login from the TD AM web page). But on my old TD AM account, I can. They need a first name, last name and email address. If I'm the first, send it to me via private message.

Hope you're ok w/whatever commission you're going to get.

[artie]

It looks like I can't send referrals from my TOS account (have to login from the TD AM web page). But on my old TD AM account, I can. They need a first name, last name and email address. If I'm the first, send it to me via private message.

Hope you're ok w/whatever commission you're going to get.

Ok - that works - will sign up today.

[mcmatterson]

So I moved some money over to IB to open an account there and left a little in OptionsHouse just because I like the platform and I didn't want to close the account out yet. I called them last week to make sure I wouldn't run afoul of the PDT rules since I wouldn't have more than 25K in that account for now and they say, "Oh no, no problem, you'll still be able to trade in your account.". I log in this morning to a nice PDT Margin Call notice. I call their customer service back up and they tell me they can reset it but of course that won't happen until tomorrow! I wouldn't be so frustrated except that I proactively called them to specifically prevent this from happening. I know missing one or two trades isn't the end of the world but GMCR looked pretty attractive this morning

/Rant Off

This just happened to me too. Technically I only traded once where there was a round trip in the same day (LNKD RIC #2 today), but I guess the fact that it is four separate contracts is enough to trigger the PDT rules. I'd never heard of them till just now. Not sure what to do now.

[RobertB]

Yes, sometimes trading option spreads triggers the pattern day trading rule (PDT) even when you are not logically thinking of your trades this way. For instance, if all within one day you open a vertical spread and roll it up a few strikes, and some of the new rolled-up strikes are identical to the old strikes, you will, in effect, have done a day trade on the identical strikes. The rules do not make exceptions for spreads; the rules see only the legs. This is something to consider when rolling a position that you opened that same day.

I believe that if your account is above $25,000, the rule doesn't apply.

Edited August 1, 2012 by RobertB

[artie]

ok - my initial experience with ameritrade/TOS isnt too positive....besides the false positive RegT violation greeting me upon logon, I am having problem getting orders filled. Maybe I'm still trying to explore the best ways to place limit orders...but when a mark goes 2 cents below my price, im very surprised my orders are still pending.

K - figured out how to watch all order that were filled....guess its not too bad. I was probably just undercutting the price.

Edited August 13, 2012 by artie

[cwerdna]

ok - my initial experience with ameritrade/TOS isnt too positive....besides the false positive RegT violation greeting me upon logon

During the earlier days of the TOS/TD AM integration, once all the account management stuff went away from https://www.thinkorswim.com and TOS accounts had to go to www.tdameritrade.com instead, I'd get false positive Reg T violations ALL the time on the TD AM web site.

I called them about it since I didn't even understand what it meant. In my cases, after talking to them, they were false alarms for me and I just learned to ignore it for months. I knew I had plenty of cash in the account, I don't short stocks and it wasn't in danger of going into margin call.

dwilliams8649 http://steadyoptions.com/forum/topic/454-jeff-augen-weekly-strats/#entry7224 asserts

I think TOS is negotiable down to .50 with no ticket (you would have to have a large account and trade a lot of volume to get this

I wonder how large it needs to be. I know of nobody having it that low. If I had that type of deal, I'd probably close my IB account.

[ChadK]

Getting a good deal on comms is now difficult at TOS since TDA bought them. Previously, with relatively high volume, you were able to get under $1. I know several people who have gotten $0.75 (and that includes the exchange fee, unlike IB, so $0.75 is really $0.75). I have one friend who has gotten less than $0.75, but he runs a multi-million dollar hedge fund and trades around 10,000 contracts per month. Since the TDA takeover, I think they'll only give you about $1.00 if you are trading >1000 contracts per month. They'll do $1.25 if you do a few hundred per month.

[dwilliams8649]

Well... As of June, I paid 57k in commissions, I spread my account across multiple brokers since then, and my commissions rate has increased. I am currently at .70c with no ticket.

[ChadK]

Well... As of June, I paid 57k in commissions, I spread my account across multiple brokers since then, and my commissions rate has increased. I am currently at .70c with no ticket.

Well, some quick math says that you're averaging over 13,000 contracts per month. That's sizable as well. But you make a good point. Most of us mere mortals aren't going to get the claimed $0.50 per contract no ticket any time soon.

It was a few years ago that I was >1000 contracts per month when I went from $1.00, to $0.80, to $0.75. Now I'm trading a bit smaller, averaging only about 500 contracts per month, but still enjoy the $0.75/contract no ticket.

[ChadK]

FYI, some people are getting $0.50/contract no ticket at Trade Monster with $25k account with group affiliation. But like IB, there are some exchange fees, as high as $0.60 per contract on SPX, but only like $0.025 on RUT. I don't know where their exchange fees are listed.

[dwilliams8649]

I think if you can get TOS to around 1.00 with no ticket, it's worth it to leave IB. After all is said and done, IB will be more expensive. If you use IB, most likely you have to go out and buy charting software and a good option's analytics / backtesting package. And most charting software (there are some exceptions) require separate exchange agreements. Plus the money you might lose trying to modify and adjust complicated trades.

[Rusty]

I have some concerns with TOS fills. I entered an order this morning to open the HPQ weekly straddle at $1.25. This was before Kim's alert. I never got a fill. I see that Kim was filled at 10:30 using IB while my order just sat there. This is not the 1st time that this has happened and others have reported similar experiences. So while I am "grandfathered" in TOS @ 1.00/contract, it really is not a bargain if I can't execute my trades at my prices.

I plan on keeping the TOS account minimally funded so I can still use their tools and opening an IB account which seems to have the best executions.

[Xfanman]

I have some concerns with TOS fills. I entered an order this morning to open the HPQ weekly straddle at $1.25. This was before Kim's alert. I never got a fill. I see that Kim was filled at 10:30 using IB while my order just sat there. This is not the 1st time that this has happened and others have reported similar experiences. So while I am "grandfathered" in TOS @ 1.00/contract, it really is not a bargain if I can't execute my trades at my prices.

I plan on keeping the TOS account minimally funded so I can still use their tools and opening an IB account which seems to have the best executions.

That's why I switched from OptionsHouse. Any broker that is trying to fill orders off one exchange is not going to do as well as IB when they are getting you the best fill off multiple exchanges.

[Dawajmeister]

I'm pretty sure TOS fills orders off of more than one exchange.. but you are correct not as many as IB.

[dwilliams8649]

I have some concerns with TOS fills. I entered an order this morning to open the HPQ weekly straddle at $1.25. This was before Kim's alert. I never got a fill. I see that Kim was filled at 10:30 using IB while my order just sat there. This is not the 1st time that this has happened and others have reported similar experiences. So while I am "grandfathered" in TOS @ 1.00/contract, it really is not a bargain if I can't execute my trades at my prices.

I plan on keeping the TOS account minimally funded so I can still use their tools and opening an IB account which seems to have the best executions.

Well, the reason for that is IBs SMART algorithm for routing orders is a bit SMARTer than TOS's... However, for complex orders, more than 2 legs, I seem to get better fills in TOS. Not sure if anyone else has such an experience. .

[Xfanman]

I misspoke, it's not that they don't sell orders off multiple exchanges, it's that IB "combines" legs off different exchanges and (Options House at least) doesn't do that. Your spread has to be opened or closed on ONE exchange or it doesn't fill.

[cwerdna]

Getting a good deal on comms is now difficult at TOS since TDA bought them. Previously, with relatively high volume, you were able to get under $1. I know several people who have gotten $0.75 (and that includes the exchange fee, unlike IB, so $0.75 is really $0.75). I have one friend who has gotten less than $0.75, but he runs a multi-million dollar hedge fund and trades around 10,000 contracts per month. Since the TDA takeover, I think they'll only give you about $1.00 if you are trading >1000 contracts per month. They'll do $1.25 if you do a few hundred per month.

I see. Well, I really missed the boat there since I joined TOS way after the buyout happened.

Re: hedge fund, ok, that's insane. I don't do anywhere close to that # of contracts a month.

I did get TOS to lower mine to $1.25/contract. When I was paying $2.95/contract on TOS, I was doing $700+/month in commissions.

Well, some quick math says that you're averaging over 13,000 contracts per month. That's sizable as well. But you make a good point. Most of us mere mortals aren't going to get the claimed $0.50 per contract no ticket any time soon.

It was a few years ago that I was >1000 contracts per month when I went from $1.00, to $0.80, to $0.75. Now I'm trading a bit smaller, averaging only about 500 contracts per month, but still enjoy the $0.75/contract no ticket.

Yeah, $0.50/contract seems impossible for mere mortals. You're lucky you lucked into such great rates. If I got $0.70 or $0.75/contract on TOS, I'd most likely leave IB.

[Kim]

So how much most members are paying with TOS? I'm not talking about someone trading thousands of contracts, but maybe few hundred?

[Dawajmeister]

I'm paying $7(per spread) and .75/contract, going to try to get it reduced again in a month or 2. I got that without really trading that much, maybe 100 contracts per month. (most of the volume at the time was on eoptions..) I'm sure I can get another decrease since I'm around 400 a month right now.

Edited August 17, 2012 by Dawajmeister