Brokers and commissions

[Kim]

I have been with IB for over 8 years with no issues. I agree that there is some learning curve for their platform, not sure of it is more or less than with other platforms. My commissions average about 0.75-0.80. It is true that those various fees are annoying, but the average is still cheaper than most other brokers, and I know that I'm paying the same fees/commissions as others, and my commissions don't depend on my negotiating skills. 

 

As for your example - to trade a 10 contract IC you need fairly large account (if you allocate only 10-15% to each trade). For smaller orders, the $4.99 order fee will take a larger chunk of the trade, and like you mentioned, not everyone would get that fee. And this trade with IB would be around $30-32, not $40.

 

As for trusting them - IB is one of the largest brokers in US and is ranked as #1 broker by Barrons in 2012 and 2013:

 http://online.barrons.com/article/SB50001424052748704836204578349290221878444.html#articleTabs_article%3D1

[CJFerreira]

My point was that their commissions, though advertised as being so low, are quite variable and not really as low as they make it appear due to the unpredictable and sometimes amazingly large "exchange fees".

 

I find their "security" to be disruptive, very inconvenient, and - considering the bizarre conditions they put on their usernames and passwords - a lot more trouble than it's worth. For me, their security system is more inconvenient and more likely to cause me trouble than it's worth.

 

The trust issue is based on their failure to notify me of any hold issues on my account, refusing to transfer funds (again without contacting me) due to an extremely small hold amount, and the fact that in viewing their trading reports and portfolio statement I was unable to reconcile the two. Out of 12 trades, I had two that I had no memory of placing, although they were of securities and quantities (although perhaps selling instead of buying) that I was trading in. These were the trades I identified as probably "accidental" trades, but the fact that I could not see any correlation between the trading report and my actual portfolio leaves me with a deep feeling of unease with their procedures and system.

 

I only relate my actual experience with them. As with all anecdotes, your mileage many vary, but I offer this as a cautionary tale for those who might be lured by the promise of super low commissions so long as you know what you're doing. I know what I'm doing, but I am not willing to do it with Interactive Brokers.

[Kim]

I see your point, and thanks for sharing - I think it's important that people see different points of view and can make an educated decision.

 

The security device is not very convenient, but not a big deal. You can get around it by opening a master account and linking the client account to it. 

 

As for trades - here I'm pretty sure they would not mess with your account and list trades that you did not execute. I always see my trades in my portfolio. 

 

There are some other advantages to IB: much lower margin rates, much lower margin on VIX trades etc.

[CJFerreira]

I definitely see advantages for some people to using IB, mostly in the margin areas.

However, this was an IRA account and so I had no margin benefit at all.

I was led to believe that they would give trading credit for trades not settled yet, i.e., they would allow a new trade before the prior trade had settled, even in an IRA account - a sort of limited margin - but that did not turn out to be the case. This was probably my misunderstanding, but it added to my dissatisfaction.

 

Their security was a big deal for me. Having to keep this security number generator available at all times in case I needed to make a trade; make sure I could always locate it and not lose it, and their system doesn't permit any access via an iPad, which for me was a big inconvenience.  When you start talking about Master and Client accounts and liking them together I start thinking of major brokerages or people who for some reason have numerous accounts, not really something that works for someone who might log on once or twice a day to monitor or make a trade.

 

Also, let me be clear that I do NOT believe they were messing with my account in any way. However, that said, I could not reconcile their trading statement to my portfolio. Maybe the "extra" trades had already expired and been removed from my portfolio. Seeing these errant trades made me very nervous. Their lack of customer service and support as I try (it still hasn't gone through) to move my portfolio out of their system raises very bad memories of brokers who were great when you wanted to purchase shares from them, but stonewalled you when you tried to get your money out. My family was burned by Harry Stern and Technical Equities in the 1980s and so I am very leery of any broker that does anything to keep you from moving your portfolio.

[PaulCao]

I definitely see advantages for some people to using IB, mostly in the margin areas.

However, this was an IRA account and so I had no margin benefit at all.

I was led to believe that they would give trading credit for trades not settled yet, i.e., they would allow a new trade before the prior trade had settled, even in an IRA account - a sort of limited margin - but that did not turn out to be the case. This was probably my misunderstanding, but it added to my dissatisfaction.

 

Their security was a big deal for me. Having to keep this security number generator available at all times in case I needed to make a trade; make sure I could always locate it and not lose it, and their system doesn't permit any access via an iPad, which for me was a big inconvenience.  When you start talking about Master and Client accounts and liking them together I start thinking of major brokerages or people who for some reason have numerous accounts, not really something that works for someone who might log on once or twice a day to monitor or make a trade.

 

Also, let me be clear that I do NOT believe they were messing with my account in any way. However, that said, I could not reconcile their trading statement to my portfolio. Maybe the "extra" trades had already expired and been removed from my portfolio. Seeing these errant trades made me very nervous. Their lack of customer service and support as I try (it still hasn't gone through) to move my portfolio out of their system raises very bad memories of brokers who were great when you wanted to purchase shares from them, but stonewalled you when you tried to get your money out. My family was burned by Harry Stern and Technical Equities in the 1980s and so I am very leery of any broker that does anything to keep you from moving your portfolio.

 

Commenting on the security token, I find it really annoying as well. There's actually a setting in IB Account Management where you can turn off the security token login for trading. You have to click through a waiver that basically says you won't hold IB liable if someone gets hold of your password. However, for regular account management like setting up account deposits/withdrawals, reading IB's messages to you, you still have to use the security token. 

 

I have just scanned my security token and uploaded it onto Gmail so I can look it up anytime and input it in for account management. Of course, it completely defeats the purpose of the security token. But I prefer the convenience over security, 

 

In regards to IB commission, basically if you never ever trade a market order, you'll never be charged more than the stated contract price; because if it's a limit order and you get hit later, IB should pass through the exchange rebate fees to you. There are rare cases when there's hidden orders on the exchange, meaning someone has a non-visible order on an exchange order book and you hit it; then you have to pay for the exchange liquidity taker's fee's. 

 

In regards to IB's awful interface, I completely agree. Especially their WebTrader interface and the way they update the price and when you are trying to input a spread order, an order might turn from a credit to a debit order depending on how the price of your different legs are coming in; and also the way that the limit price box updates to the market bid/ask mid as you are typing in your limit price is very annoying. 

 

Another thing most people who don't know IB should know is that they are very very strict about margin. Let's say you exceed margin limit, some brokers will be lenient and give you extra time to liquidate or wire-in additional funds. Not IB, they will send you an e-mail once you are within 5% threshold and start liquidating right away when you exceed your limit, 

 

Best,

PC

[codeman73]

So how is the U.S. tax reporting from IB? TDA is so effortless, so I'm worried I'll suddenly have a tax prep bill that will wipe out my savings.

 

I was wondering this too.  I am researching SteadyOptions and IB and found IB's tax sections.  Apparently they can do an export (I forgot the file extension) which TurboTax can import into its desktop version, but not its online version.

[stifland]

How about MB Trading? Thanks to the Barron's article, I discovered their very low commissions of $0.95/contract (http://www.mbtrading.com/commissions.aspx?page=Options)?

I haven't had a chance to dig thru the rest of their fees or look for comparisons but I did find http://www.elitetrader.com/vb/showthread.php?threadid=217517

"In my opinion, switching to another broker from thinkorswim would feel for you like going from a Mercedes to a Nissan. I left thinkorswim a year ago for MB Trading, thought I will save a few pennies On trading fees but pretty fast realized its not wort It.

I think your reasons may be important to you but especially as an options trader I would recommend not moving."

Heh.... I'm no Mercedes fan and used to own two Nissans.

I'm currently grandfathered into Thinkorswim's old commissions (http://web.archive.org/web/20110308111401/https://www.thinkorswim.com/tos/myAccounts/displayRates.tos) which is $2.95/contract. For the small trades I do (usually 1-5 contracts), it's a lot better than TD AM's normal ripoff rates.

I have muticharts in past for futures. It is pretty nice platform, but downside is I beleive you have to pay for datafeed where at TOS you wouldn't...I will have to check on it. TOS is now 9.95 minimum and .75 / lot.

 

My bad, MB is a datafeed for multicharts...sorry got confused there;)

Edited July 31, 2013 by stifland

[PaulCao]

Hi, 

 

Also wanted to ask if anyone has tried out TradeStation? 

 

Not really interested in their fee structure or execution but read that they have historical options data dating back to 2000. If this is true and can be easily extracted via tools or API, it'll be a great boon for the earnings trading strategy, 

 

Best,

PC

[Mikael]

wait, we can get 1.50/contract with no ticket? how do we get the SO rate? I'm paying 7 bucks + 0.75 per contract. 

[Kim]

http://steadyoptions.com/forum/topic/466-tos-discounted-rates-for-so-members/?hl=kenny

[Deho]

Hi Kim, what USD 0.7 per contract fee at IB means? Say if you buy 1 AAPL call and sell it afterwards you pay 0.7 or 1.4 in commisions? And if you buy 1 AAPL call spread and sell it afterwards you pay 1.4 or 2.8? thanks

[CJFerreira]

It is $0.70 per contract whenever you make a trade. If you do a single contract vertical spread, that's $1.40 (buy one option; sell one option). If you sell the spread, that's another $1.40.

As per my earlier post, that $0.70 per contract is more a guideline than a rule, since they add in exchange fees and rebates, which can be significant. I ended up paying anywhere from $0.45 to $1.09 per contract, with no way to predict what it would be each time. People say that in the long run it averages out to around $0.75 per contract.

[Deho]

Thanks, one more question, is it possible to negotiate with IB free real time quotes for obligation to provide them with some minimum amount of commission?

[Marco]

Thanks, one more question, is it possible to negotiate with IB free real time quotes for obligation to provide them with some minimum amount of commission?

IB doesn't negotiate fees even if you pay 10000's of $ per year. If you trade more than 10,000 lots a month you get a discount (and more at higher volumes)

Same goes for realtime quotes (no haggling). You get a lot of US realtime feeds for free (as a private investor) if you pay them more than 30$/month (subscribe to 'US bundle') but anyway even if you subscribe to a number of markets that are not covered in that you don't pay more than a few bucks / month for that. If you are a halfway active trader that will be a fraction of what you pay in comm. 

[Guest Deltahedge]

After reading this thread perhaps I should count my lucky stars with the commission rates I'm enjoying at TOS. Granted, I've been a legacy user of the firm (circa 2008) prior to the TD Ameritrade acquisition, but right now my rates are .75/contract no ticket or minimums. I negotiated with the senior guy on the tradedesk a while back (Scott Sheridan's replacement) and he was willing to offer this fairly competitive rate.

 

I do have other accounts, my other primary account at Trademonster where I was able to receive a promotional pricing of $.50/contract no minimum thanks to the folks at Sheridan mentoring. Typically I've traded fairly liquid products at TM so no complaints of bad fills or inability to be filled when the market moves. As long as price my spread .01-.02 from the mid I can pretty much be filled immediately. Their platform is nowhere near as exhaustive and fluid as TOS', however it does have some great predefined option scans for locating interesting volume spikes and activity in the options market.

 

With my rates at TOS there isn't an overwhelming desire to switch to IB, however since IB offers superior margining AND direct access to foreign markets which TOS has yet to and probably won't offer in the near future, I may open an account in the near future and give them a try.

Edited June 30, 2014 by Deltahedge

[bike.eagle]

The mid is now 8.80, the same as it was when I was filled at 8.83 at IB. IB consistently gets better fills than TOS, in addition to having better commissions, better margin rates etc. 

 

That said, I think paying couple cents more on a $9 spread is not a big deal.

Does IB offer portfolio margin?  

[phxsuns32]

IB does offer portfolio margin.  i just submitted my application this morning and they already approved me for portfolio margin, pending my deposit of the required funds of course.  IB only requires 110,000 initial balance compared to 125,000 initial balance with TOS.  They do have the same maintenance balance of 100,000 as TOS

[bike.eagle]

Interesting.  Once you have portfolio margin, you never want to go back!  I just might have to go check out the IB website.  Do you guys get a per-contract commission rate without any per-trade charge?  I currently get $1.25 per contract with no per-trade cost from TOS.

[phxsuns32]

I haven't used IB yet as I just submitted application today but their stated commission is .70/trade with a minimum ticket of 1.00 so if you trade one contract then its 1.00 but if you trade more than one then it is .70/contract.  10 contracts would basically be $7.00

[bike.eagle]

I just called them and got more info about commissions.  They said that the total cost varies depending on which exchange the order is routed through and whether it adds or reduces liquidity.  I'm not sure how you could determine liquidity +/- upfront, but it matters.  

 

As an example, an order routed through BATS that removes liquidity would cost the IB 0.70 PLUS the BATS fee of 0.80 for a total of 1.50.  If the order adds liquidity, it would be free, so a big difference.  Maybe some of the current IB users could chime in?

[Yowster]

WIth IB, the commission vary but if you place a decent number of trades your average per contract commissions will be in the 0.75-0.80 range (no up-front per trade charge).   Some trades you'll pay less per contract and some you'll pay more but your average will be in that range.   VIX options are always a little more at over 1.00 per contract.

[Kim]

I average around 0.75-0.77 per contract, no per-trade fee. VIX and SPX options cost more.

[4REAL]

For VIX contracts you should count between $2.50 to $2.75 per contract

[Oliveira]

I am in 1.50/contract deal on TOS.

Anybody in a cheaper plan there?

IB is really offering better prices...

[bike.eagle]

I am in 1.50/contract deal on TOS.

Anybody in a cheaper plan there?

IB is really offering better prices...

Yep. Like I posted above, I get 1.25 per contract with no per trade fee. I had to negotiate that though.

It definitely sounds like the IB guys get a better deal though. How do you IB folks like the trading platform there?

[biotrader]

DO NOT go to IB. Learn from me as I left TOS and came back due to IB's horrid customer service amd ametour platform. The extra commissions I pay with TOS are worth the platform on its own. IB is a cheap broker and you get what you pay for.

[Kim]

DO NOT go to IB. Learn from me as I left TOS and came back due to IB's horrid customer service amd ametour platform. The extra commissions I pay with TOS are worth the platform on its own. IB is a cheap broker and you get what you pay for.

I disagree.

 

Lets do a quick math regarding commissions.

 

If you have a 20k portfolio, you would trade around 300 contracts with SO strategies. Assuming you pay 1.25 with TOS (and many people pay more, some pay the per trade fee as well), you will be overpaying around a whopping $150/month or $1,800/year. With 100k portfolio, that number is multiplied by 5. Even if TOS has better tools, you can spend a fraction of the savings and buy an options software like ONE for $600/year.

 

IB platform was the only one during the 2011 flash crash that was stable and did not crash. It takes some learning curve, but it's far from amateur. I agree that customer service is not the best, but this alone is not a reason to overpay thousands of dollars.

 

IB allows to trade IV calendars for fraction of margin that TOS requires ($150 vs. $500+). IB has better fills. IB has smart routing - I mean, REALLY smart, unlike other brokers.

I can go on and on.

 

But don't listen to me - IB won #1 in Barron's online broker rankings third year in a row - http://online.barrons.com/articles/SB50001424053111904628504579433251867361162

[biotrader]

I disagree.

 

Lets do a quick math regarding commissions.

 

If you have a 20k portfolio, you would trade around 300 contracts with SO strategies. Assuming you pay 1.25 with TOS (and many people pay more, some pay the per trade fee as well), you will be overpaying around a whopping $150/month or $1,800/year. With 100k portfolio, that number is multiplied by 5. Even if TOS has better tools, you can spend a fraction of the savings and buy an options software like ONE for $600/year.

 

IB platform was the only one during the 2011 flash crash that was stable and did not crash. It takes some learning curve, but it's far from amateur. I agree that customer service is not the best, but this alone is not a reason to overpay thousands of dollars.

 

IB allows to trade IV calendars for fraction of margin that TOS requires ($150 vs. $500+). IB has better fills. IB has smart routing - I mean, REALLY smart, unlike other brokers.

I can go on and on.

 

But don't listen to me - IB won #1 in Barron's online broker rankings third year in a row - http://online.barron...3251867361162. 

Like I said its a cheap skate broker so you will save some pennies on orders which IMO is not worth the gray hairs in their service. Btw here's a link that works that shows why they are voted #1.... Hint: cost http://online.barrons.com/articles/SB50001424053111904628504579433251867361162

Their platform may have been good in the 90's. The best part was their iPhone app because it actually worked. I left them 1 yr ago and sent in multiple times forms to close my account and they continue to send statements to my house with $0 balance. They nickel and dime you to death with their fees (quote fees, cancel fees, etc). At least at TOS I know what I'm paying when I click send. They instituted a card authentication system which was awfully outdated and cumbersome. It's a firm that you can tell just doesn't invest in their business and doesn't take care of customers. If you want a powerful user friendly platform and top notch service use TOS, if you want to save a few $ use IB. I've been on both sides and moved all my accounts to TOS after years with IB so I can provide you more perspective if you'd like.

[Kim]

Actually the rankings are based on 8 categories, cost is just one of them. According to Barron's, IB beats TDA/TOS in Trading experience and technology, portfolio analysis, and cost, and comes very close in customer service and education.

 

IB used to charge cancellation fees - not anymore. IB don't' charge assignment/exercise fees - TOS do ($15!!).

 

I asked TOS to explain why they charge $500+ margin for VIX put calendar while IB charges only $150. Their explanation was pathetic and showed a complete incompetence. And it was a Manager of the trade desk

 

As for commissions - why you should even haggle about commissions? With IB, you know you pay what everyone else is paying. With TOS, you should rely on your negotiation skills to get good rates. To me, it's a ripoff. Good customer service? Not even close.

 

I suggest you follow the discussions for a while and see which members get the best fills (hint: not TOS). Time after time IB customers report excellent fills while TOS customers report they can't get filled at the same prices. This topic is the latest example. It happens all the time. Over time, it costs you thousands of dollars, in addition to commission costs.

[tomkat247]

Does anyone have any experience with TradeMonster?  I saw that it was #2 in the Barron's rankings.

[bigidiot]

Tomkat, I use Trademonster. But I'm new-ish to active trading. Their commission structure looks similar to TOS. You don't save unless you're trading decent size. Right now I like them because of their website, customer service and the fills seem ok. Sometimes I get very good ones but sometimes not. I also like their extras regarding education and daily market webcasts. But I imagine as I get more comfortable/confident I'll switch to a quality lower cost provider.

[biotrader]

Actually the rankings are based on 8 categories, cost is just one of them. According to Barron's, IB beats TDA/TOS in Trading experience and technology, portfolio analysis, and cost, and comes very close in customer service and education.

 

IB used to charge cancellation fees - not anymore. IB don't' charge assignment/exercise fees - TOS do ($15!!).

 

I asked TOS to explain why they charge $500+ margin for VIX put calendar while IB charges only $150. Their explanation was pathetic and showed a complete incompetence. And it was a Manager of the trade desk

 

As for commissions - why you should even haggle about commissions? With IB, you know you pay what everyone else is paying. With TOS, you should rely on your negotiation skills to get good rates. To me, it's a ripoff. Good customer service? Not even close.

 

I suggest you follow the discussions for a while and see which members get the best fills (hint: not TOS). Time after time IB customers report excellent fills while TOS customers report they can't get filled at the same prices. This topic is the latest example. It happens all the time. Over time, it costs you thousands of dollars, in addition to commission costs.

We'll have to agree to disagree!

[LunchtimeTrader]

I use MBTrading for stocks and options.  The commissions are very good, and the assignment and exercise fees are very low.  The customer service is good and responsive too.  Their platform takes a little getting used to and it isn't as feature filled as TOS, the biggest advantage is the cost.  However, there are some disadvantages with MBTrading and their platform:

 

-The platform isn’t as responsive as TOS.  Prices are slower to update, and clicking through their “Options Trading Beta” can be a little sluggish.

-You can’t trade the RUT.  It’s not available.  They made a business decision to remove it from their platform.  You can trade IWM, but no RUT.

-If you don’t generate $25 per month in commissions, they charge $7/month for their data feed.  Only a disadvantage to the casual trader.

 

Regarding TOS / TDAmeritrade:  I still use them for my Roth.  MBTrading charges a fee for retirement accounts, and I'm not that active with that account so TOS makes more sense.  I get the same $1.50 / contract (no ticket charge) that anyone can get if they sign up through dough.com.

 

I switched to MBTrading about a year ago for my non-retirement account.

 

I hope this helps someone,

 

Matt

[bigidiot]

Hello everyone. I've been trading with Steady Options for a few months using Trademonster/options house (they merged) and became frustrated that I couldn't get filled where Kim was getting filled. I've even anticipated Kim's orders and had GTC orders in advance of Kim's and still didn't get filled while Kim did! I trade enough size to make Trademonster/OH worthwhile commissions-wise and I love their interface. So I also opened an account at IB specifically to see if I can get better fills and I'm conducting a test. It won't be perfectly scientific but I'll try to put in orders simultaneously when I can. I'm expecting IB to win this little battle. I'll post my results going forward, but my first trade test was today on the RUT mar/apr calendar. My order was for 1 lot at 10.50 limit for the day and shockingly Trademonster filled immediately at 10.49 and IB filled 15 mins later at 10.50. I had placed the orders/tickets within seconds of each other. I'll keep you guys posted as my sample size becomes more significant.

[bigidiot]

My Test Results So Far on IB vs Options House for fills: as I mentioned it hasn't been exactly scientific and I haven't been able to que up two trade tickets for every trade we've followed, but I have 6 head to head trades so far (same limit price & spread). In each case I sent IB ticket first followed by OH ticket within 2 seconds. Also I've put in smaller size on each of the IB trades.  OH and IB filled simultaneously (within 2 seconds) on 2. OH filled faster on 4 trades (anywhere from 12 secs to 15 minutes).  The trades were RUT, SINA (2), NKE, DG, GME. So far OH is holding it's own. But it is a small sample.

Edited March 17, 2015 by bigidiot

[mcmatterson]

IB rolled out an update to mobileTWS last night that appears to have reduced functionality.  Now all my spread trades (on the watchlis) show only which legs are used to build them, not the prices.  Is anyone else having this problem?

[SeanM]

IB rolled out an update to mobileTWS last night that appears to have reduced functionality.  Now all my spread trades (on the watchlis) show only which legs are used to build them, not the prices.  Is anyone else having this problem?

 

Yeah, it's driving me crazy.  The "view individual legs" button is gone.  If needed I'll add each leg to the same Watchlist, but really the last thing I need is extra lines on a 4.7" screen.  Quite frustrating.

[BobS]

FYI, for anyone using TOS, the P/L Day for today is incorrect. It is reflecting data from two days ago. I called TOS help desk and they informed me it will be fixed tonight. Does not inspire much confidence in their software.

[Dr. Z.]

Using IB, the average commission on the above was $0.68 per contract, or $2.72 round trip per calendar. I would have lost money if I had used TOS.

[Edwin]

Commissions add up a lot over time, especially with this type of trading style. I would advise you to look at your commissions statement each month or end of year and see how much you could save if you moved over. It will make a big difference in your P&L (after fees). TWS mobile and webtrader are not hard to use. I keep a small amount in TOS for charting purposes.

[Edwin]

Another option is if you haven't negotiated your fees with TOS yet, is to go on Dough and complete DoughJo, and then contact Tastytrade. They will give you a number to TOS help desk and they will give you a better rate (1.5 per contract) without a ticket charge.

[Yowster]

If you are paying a ticket fee for options trading you are simply throwing money away, and if you do most of the SO trades it will be throwing away a lot of money over the course of a year.  IB may have some quirks if you use it for everything - but you don't have to get rid of your other brokerage accounts if you like the charts, graphs or whatever else.  You can use your other account for all the analysis if you like, but use IB for entering the orders for the best commission (avg of around 0.68 per contract) and fills.   When opening trades in IB, I use the strategy builder for everything - you click on exactly what legs you want to buy and what legs you want to sell to minimize any chance of getting it backwards (this may take a few minutes longer to enter trades, but for me it minimizes any chances of errors when entering orders).  To close in IB, you can use the close position button.

[Dr. Z.]

Another benefit of IB is that option exercise/assignment is free, this saves you on option spreads and commissions when you have vertical spreads that went against you.

Whenever you have to get out of those on TOS you get ripped off, especially when the options are deep in the money and have become illiquid. 

[Optrader]

How many of use only use IB mobile trader app  ONLY ?

[krissi]

Another option is if you haven't negotiated your fees with TOS yet, is to go on Dough and complete DoughJo, and then contact Tastytrade. They will give you a number to TOS help desk and they will give you a better rate (1.5 per contract) without a ticket charge.

 

That's what I did.  Completed the Dough course then contacted TD Ameritrade and requested the fees negotiated by TastyTrade, $1.50 per contract, no ticket charge.  You have to request the reduced fee with each new account you open (for example I opened an IRA and started trading without requesting the lower fees first, those first few trades were expensive, ouch).  

[krissi]

@edboc can you explain a bit more? What is the relationship b/w Dough, Tastytrades and TOS. I have accounts with TDA and consequently the TOS. I use TOS for the analysis but trade in IB. Trading with TOS would be optimal if I could get the costs on par with IB.

 

If I understand correctly, the founder of TastyTrade (Tom Sosnoff) created TOS and sold out to TD Ameritrade several years ago.  Dough is TastyTrade's trading platform.  If you complete the Dough course you will receive a certificate which you can present to TD Ameritrade and then request the commissions that were negotiated for Dough members ($1.50 per contract).  Hope that helps!

[Optrader]

TDA's rack rate is $9.99 + $0.75/contract.  Before blindly accepting a flat $1.50/contract, you should consider your trading style and figure out what would suit you best.  Then, negotiate with them independent of any group rate (there are lots of organizations that are offered the flat 1.50/contract, not just this group).  You may find that you can strike a good deal on your own.  Also, I believe at one point (this is probably several years ago now), TDA would match commission structures of some online brokers.  I think TradeKing was on that list, so you could try that - $4.95 + .65/contract.  A structure like this will save you a total of $3.55 each time you trade a two leg spread with 5 contracts, so again, you need to think about the kind of trades you're going to be placing.  And, you can have multiple accounts with different commission structures...

 

You are absolutely correct. I was just trying to understand why 1.5 per contract is cheaper. It is not really .  .65/contract pricing with TDA and so its cheaper to trade more contracts than IB . e.g for 100 contracts it will be   

on IB at  1.5  =  $150  and on TOS it is  just $75  at   .65/contract  and $10 ticket fee.

 

So TOS is cheaper for high volume trades 

[akhouston]

You are absolutely correct. I was just trying to understand why 1.5 per contract is cheaper. It is not really .  .65/contract pricing with TDA and so its cheaper to trade more contracts than IB . e.g for 100 contracts it will be   

on IB at  1.5  =  $150  and on TOS it is  just $75  at   .65/contract  and $10 ticket fee.

 

So TOS is cheaper for high volume trades 

 

IB contract rate is .75 or 1.5 for spread (but same 2*.65 should be applicable for ticket + per contract pricing scheme). So in your case 100 simple contracts will be 75 on IB and 75 on TOS, while 100 spreads will be 150 on IB and 140 on TOS.

[Optrader]

So its not much different. 

But does it mean that there is better contract pricing with IB. Like do some customers get say .55  or .60 ?

With TOS every few months I call them to take off some more from per contract as well as ticket fee and they do it. Will keep calling them every few months.

[Yowster]

You have to remember, IB is not a flat fee per contract, it varies based on some sort of market demand - sometimes you'll pay over 1.00 and sometimes its only a few cents (I've had some occasions where I actually got a credit for placing a trade).   But I can tell you that if you do a decent amount of trading then the per contract average will be around 0.75 over the course of a year.   VIX contracts are always higher though, over $1.00.

 

I agree that the difference between IB and other brokers narrow when you get into those trades with large numbers of options contracts.  But, for many of the SO trades I think it would be tough getting fills for that many contracts - for stocks with huge option volume (VIX too) its not a problem with large numbers of contracts but for many of the other companies it would be quite hard.  

Edited August 1, 2015 by Yowster