I figured I'd start a general topic on IB since this isn't about commissions.
I found a quirk w/IB that I'd not seen w/TOS. I bought a FDX call (not a trade discussed here) and had an open sell order on it. With the sell order open, I tried to buy another FDX call and IB won't let me. It says "Order Reject: This account cannot have open orders on both sides of the same US Options contract in any related accounts."
If I try to override and transmit, it rejects it for the same reason. Known issue? Any workaround or just something I have to live with?
I can do the same thing on TOS (and am doing it now). it doesn't care. It lets me do that.
I'd rather not cancel the open sell order on FDX as I'd get hit w/a cancel/modify fee on IB, which is something unheard of on TOS (and most brokerages that I'm aware of).
Hi there, I am new to using the IB/ TWS platform. My understanding is that the probability of ITM can't be displayed in the option chain in TWS. As a substitute you can use the option's delta, however that does not seem to correlate very well. I would expect deviations in the low one digits but get much bigger differences. For example, in the attached screenshot I am looking at selling a 70.7 delta put on the SPY which should have a probability ITM of around 30% (1-70.7%) , then looking at the quote details shows me a probability of profit 59% which is quite far off? My only explanation would be commisions but is that it? Really stuck here so help is really appreciated? Many thanks!
I want to talk today about commissions.
Lets assume that you buy a straddle for $2 ($1 each option). I have an account with IB (Interactive Brokers) and pay 0.70 per contract. So for me to do a round trip trade is 2.80. This is 1.4% of the cost of the trade. So if my gain is 10%, then I keep 8.6% after commissions.
If you pay $1.5 per contract, then your total cost is $6. That's 3%. You need 3% gain just to break even.
Some brokers charge you per ticket fee plus per contract fee. This might be a good deal if you do a lot of contracts. For example, if you do 20 contracts and pay $5 per ticket plus 0.30 per contract, then you pay 0.55 per contract. But if you do just 2 contracts, then it's 2.80 per contract.
Also some brokers charge a fee per ticket per leg, others per ticket for the whole spread. For RIC which is 4 leg trade, it's a huge difference. Since you make it as one trade, you might pay one per ticket fee with some brokers or four fees with others.
Commissions is one of the reasons why I don't like cheap stocks. A straddle on a $100 stock might cost around $5.00-6.00. Paying $2.80 commissions is only 0.5% of the trade. But straddle on $15 stock can be only $0.70, so $2.80 is 4% of the trade. A huge difference.
When choosing a broker for those strategies, remember that commissions can make a huge difference. Check the fine print and do the math which broker is better for you based on the number of contracts you are going to trade.
Update: For those who don't want to read the whole thread, it seems like most members really like IB. Barrons's agrees:
Based on Barron's numerical calculations, Interactive Brokers (interactivebrokers.com) claims the No. 1 spot overall for the third-straight year.
Have all of the IB customers received the email last night (Mar 17) informing us that we have to change our data feed subscriptions by
April 1, 2017, otherwise we are going to be defaulted to 20 minute delayed quotes? With each quote being a "snapshot" of a moment in time and no longer "streaming" info?
I was not 100% sure what I needed to do but, I added a $4.50 package that appears to turn the delayed data back into real-time streaming data.
I think that was the correct choice, but I just wanted to hear from others
By Crazy ayzo
I'm looking for someone that is a power user of some of the following... Tradehawk with Tradier, Interactive Brokers, Optionnetexplorer ONE, CMLviz TradeMachine... and any other tools that you find particularly useful. My schedule is fairly flexible. I'm in the pacific time zone.
If this is something that interests you either post here or PM me with an hourly rate. It's ok if you only know some of the tools, I don't expect anyone to know them all. I can pay via paypal.
After I get a better handle on the tools, I'd also be interest in working with someone on strategy of non-directional trades.
P.S. I did get Kim's approval before making such an off-topic post.
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?
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."
"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.
I tried to to buy 1 Apr SPX 1300 put and getting an error message that I have insufficient margin. The message indicates that the margin will increase by 53,985 (see attached image).
I opened a ticket with IB. Their response was:
I couldn't believe this, but the fact remains.
No expert here, but after being around for about 3 months, hopefully the below tips will be helpful for you:
Expect to not get fills for more than 1/4 of the 'official' trades.
Watch for discussion threads. Try to do some analysis of your own (will take a couple of months of following trades to really get a hang of it, but read, ask questions, you'll pick it up). If you think you'll like some of the 'discussion' trades, set a limit prior to the official entry and hope for a fill. These have been my best trades thus far.
Follow the 'Unofficial Trades' thread. LOTS and LOTS of great trade ideas (and discussion) that never make it to the official (lots of times due to liquidity).
If you are following these threads, you'll be able to get into about 1/3 or more of the trade suggestions (official or not) even if you are only doing stuff after hours. Also PAY ATTENTION to earnings dates so you know what needs to be closed when. Kim obviously only tracks the official trades, so if you take on some that are unofficial, you want to make sure you know when to get out and make sure to close out. Do not hold through earnings. Be patient with the trades, don't chase. You'll get a feel for it much better after the first couple months.
If you are a newer trader, I would personally stay away from IB. They do NOT cater to new/beginner traders. Their customer support has never been bad, but they do have an expectation of knowledge from those using their platform. Which by the way is ABSOLUTELY TERRIBLE.
I'm currently using Tradier Brokerage. Commissions = $40 per month (unlimited options trades using Steady Options Coupon Code) per account. If you are interested in a $45 stocks + options unlimited, I have one for that as well. If you go this route, I would highly recommend using the DynamicTrend TREND platform ($30 / month - one fee, but can be used for all of your accounts) as the web platform from Tradier is worse than IB's. Trend though is AMAZING, and makes Tradier 100% worth it. Over the last week since I've found Trend, I've entered and gotten the exact same fills from both brokers, but IBs position is always worse due to commissions. I'll likely be moving my last account over from IB to Tradier in the near future. NOTE: I also tried ONE and OptionVue (which you get some free trial time through Tradier to try them out) and hated managing positions in them.
I was VERY tempted to try Tastyworks for their platform alone. Commissions on par with IB, but a platform that is SOOOOOOOOOO much easier to use.
Hope these comments are helpful.
I was also struggling with this. I couldn't find anything that would easily take several transactions correllate them to a strategy and bind them to an account so I have lots of ways of tracking my P/L and current balances. I finally found this one:
This does not tie into any brokers (have to enter all trades manually) but the tracking, reports, and even risk profiles are great. And they are VERY responsive about feature requests and bugs. And the price is right...$22/month.
All told, I have the following monthly fees for managing all my trading at the moment:
Tradier - $40 per account (x3) / $120
TradePortfolioMgr - $22
TREND - $30
SteadyOptions - $125
Total: $297 ($80 of which is in my IRA accounts)
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