QuickNick

@Ringandpinion I highly recommend TastyWorks. I still use them as my backup broker and will be using them as my main broker after my 500 free trades with Schwab is over. TastyWorks is the least cumbersome platform for trading options IMHO. I haven’t even gotten into analyzing trades on ONE because TW makes it so easy to analyze trades and move around the legs to see the effect. TW also adds up your gains/losses on a multi-step trade easily in the history tab. You just click to highlight the parts of the trade you want summed up and it does it for you instantly. Their exchange fees are higher than most brokers, but they’re probably more in line with Interactive Brokers. However, if Schwab/TDA goes to zero commissions, then I’d bet TW drops their round trip commission to 50c to open and $0 to close instead of $1.00 so they stay competitive. Also, their execution quality is among the best in class from my experience. Tom Sosnoff and some of his teammates were market makers for a decades before they created ToS and then created TastyWorks brokerage platforms. So, they know better than most anyone how to get the best fills and price improvement. In fact, they pride themselves in the reliability of TW during high vol times when older platforms glitch out because their backend systems can’t and the amount of data. TW also executes trade well at market open and close in my experience. A lot better than ToS and a little better than StreetSmart Edge. They’ve confirmed it’s because of their newer and more advanced architecture than how they built ToS a couple decades ago. It gives them more speed, capacity and future capabilities. In fact, I strongly suspect Schwab will upgrade to better front and backend systems like TWs when they integrate ToS. If they don’t, then it will leave them at a major disadvantage regarding reliability and order execution. Especially if they drop option commissions to zero and bring in a flood of active option traders like they did when they dropped stock trading to zero commission. TW’s head of trading was even cool enough to call me personally and answer my detailed questions about their order execution. They don’t use or offer elaborate algos like IB. They believe more in speed and reliability. Their trading operations team is constantly monitoring which market maker(s) are giving the best fills and they flow most of their orders to the one(s) that are doing the best job for them. Their order flow doesn’t overwhelm one or two market makers because it’s millions, not billions. They’re even cutting a market maker named Wolverine that I’ve seen other brokers are still using and they’re looking to add Sequoia to their list soon. The whole platform was created primarily for making option trading easier and the improvements they implement do that too. Everyone you’ll interact with at TastyWorks is an option trader, so the customer service excellent and insightful. The free trade ideas from a couple dozen of their traders compliment the SO strategy well because they’re short Vega. Side note, the only free lunch I’ve found in my broker research is active stock (not option) trading on Fidelity. Top notch stock order execution speed and reliability for $0, PLUS the rebate 99% of the payment for order flow to the trader as price improvement. They’re losing money on this to attract more assets to their wealth management platforms. I’m sure the data shows that the majority of active traders tire out and end up wanting a managed account.

@Motion Sorry I missed this question from you last month. Tradestation is a pretty cool platform because you can do automation on it and it integrates with Trading View charting. From what I researched, their options order execution quality is average to above average. I haven't researched TradeZero America, but the name gives me caution. The "free" and ultra-low cost brokers usually end up actually costing you a lot more than the best brokers because you may tend to miss more fills on good trades. As well, on the trades that do get filled, they retain more payment for order flow to pay their bills, instead of returning it to the trader as price improvement. It's a shell game and usually, people that play shell games are hiding something that's not to your benefit. The straight forward brokers like Interactive Brokers and Schwab usually end up making you a lot more money than the little you thought you might save with the "free" brokers.

Regarding fundamental trades, spread-loss and index underperformance would be a concern for some investors. Fundamental investing usually resembles value investing which often takes several months or more to come to fruition. We may need to buy LEAPS to reduce theta decay. However, compared to options with a few months DTE, LEAPS are much more expensive (less leverage) and much less liquid for the DITM delta we would want. I think that’s ok in a strategy like Anchor because we make very few LEAP option trades per year and the ETF LEAPs are more liquid than the vast majority of individual stocks. Also though, previously when Anchor used individual stocks or dividend ETFs, I’m too many users were complained about it lagging the indexes. Going forwards, I think it’s very likely that value stocks and quality dividend stocks should outperform over this decade like they did 2000-2010, but we can’t be certain. To shorten the length of options needed to just a few months for liquidity and lower option cost (more leverage), a combination of fundamentals with a catalyst and/or technicals may be better suited strategy. Stocks like those picked by Motley Fool’s Stock Advisor service seem to lend themself well to doing Poor Man’s Covered Calls (PMCC Diagonal) with the short far out of the money at a low enough delta. We could also go short the weakest names using Poor Man’s Covered Puts (PMCP Diagonal). We could sell the short option less than 60-days out and either roll or temporarily close the short when it either decays 25-75% or reaches 21 DTE to reduce Delta risk or 7 DTE to reduce Gamma risk. The idea of closing the short around 50% decay and then quickly reopening if its value shoots back up or if it doesn’t, just waiting and rolling to the next 30-60 days short sounds optimal based on intuition. However, backtesting to see would help if we can’t find valid research on it online. One of our members is using this approach on the shorts for the long term diagonal trades we have in SO. Based on his recent response to Kim and Yowster, it sounds like it’s juicing his returns up nicely.

All of those ideas sound nice as long as there is an abundance of mentor resources to nurture them without it taking away from the performance of the core SO strategy. Along the lines of @Rado’s topic today, how about a section called something like Theta Trades or Premium Harvesting or Options Income. These trades would be beneficial compliments to the SO trades because they benefit from time passing (Theta decay) and IV falling (short Theta). Basically expand on concepts promoted by TastyTrade and Option Alpha’s with the Steady Options level of sophistication that would make them actually work better.

@yalgaar If you haven’t already, and you believe the difference in paper trading and real life fills is a major problem, then perhaps try using a direct market access broker like the pros are using to get the best fills possible. Cutting the middlemen wholesalers out of the equation by using Interactive Brokers, for example, should make a significant improvement in your fills. As well, using Option Net and other resources available should be helpful too. To me, being a fellow newer member and using a broker that routes orders through wholesalers but then concluding profiting from following official trades is virtually impossible would be similar to me being an above average golfer with about 10 handicap that uses Wal-Mart clubs saying that breaking par is virtually impossible with the best pro as my caddy. The caddy may help drop a few strokes. A lot more practice and a lot more lessons will usually be needed for several months to a couple years to drop those several more strokes. Then upgrading to the best clubs fitted to your swing (customizing IB to your workflow) and using other game improving resources the club pro suggested for me to use should cut off a few more strokes on average to get me consistently breaking par. I can’t expect to break par consistently with my current skills and gear even if I hire the best pro golf trainers to be my caddy every weekend. Consistently breaking profit in options trading is a transformative journey similar to that of being able to consistently breaking par in golf.

@rasar @Ringandpinion I forgot about E*Trade! They could be the best solution for RingandPinion if he needs the platform that will work best with Linux. I think that would have to be the Power E*Trade platform because it’s web based. Worth a shot They’re also actually better long-term broker diversification, regarding platform glitch risks, given that the best of ToS and SSE are said to be merged within a couple years or so. Lastly, to Rasar’s good point regarding resources, Etrade was recently acquired by Morgan Stanley, so that box is checked too.

@Ringandpinion I used TastyWorks through the March volume/volatility madness and they didn’t have any of the issues I’m hearing about on ToS. The platform is option trader centric with an intuitive interface and specialized features to make option trading easier. Their fees are a little above average after tacking on the exchange fees, but not compared to the days of $5 or $10 commission per trade + per contract fees. Their web app is almost as feature rich as their desktop app. Their mobile app is good, but ToS mobile is still a lot better IMO. Their customer service and option order execution is good too. It’s the platform you’re seeing in a lot of @TrustyJules screenshots, so maybe it could add some color to why he uses them vs others. I recently started using StreetSmart Edge (SSE) by Schwab and I like it. Their Walk Limit order has been a very useful feature to me. I wasn’t using them yet in March, but I didn’t read about any severe issues like ToS and Robinhood had when I researched SSE. Their web app is also almost as feature rich as their desktop app. However, their mobile app isn’t nearly as good as ToS mobile though. I think their customer service and option order execution may be the best from what I’ve experienced and researched so far. A great promo their offering is 500 free trades up to 20 contracts each if you move $100k to Schwab. It would be a lot of big trades, but that’s up to $6,500 savings for trying them. Lastly, of the more retail customer oriented brokers,

@rasar Schwab / StreetSmart Edge could be an ideal backup broker to ToS for you. Their desktop app is feature rich, loads quickly, it’s stable and their customer service is top notch. Also, their web app, StreetSmart Central, is arguable best in class IMHO. Both apps have been glitch free for me so far. They offer direct access smart routing and retain the among lowest amount of payment for order flow when they do route through one of their 6 wholesalers. They’ll also have a significant in house order execution advantage after completing the TDA merger in few years. From what I read, both platforms will remain for a couple to a few years. The there should be one platform with the best combined features. My favorite unique feature of theirs so far is the Walk Limit order. A great promo they’re offering is 500 free option trades up to 20 contracts each if you move over $100k. Runner up if you want a simple but innovative platform is TastyWorks. Their user interface is intuitive, their analysis features are the best I’ve seen from a broker and they have other unique features that may help make option trading a little easier. However, it’s not quite a fully mature platform yet, so occasionally they roll out features with glitches for a while. Also, they may be missing a basic feature that you use in your ToS workflow. Their fees end up above average because they add on so much for exchange fees. They don’t offer direct access order routing, but their execution is still pretty good with the 4 wholesalers they use. Also, their customer service is good. Personally though, I would revisit using them as your backup in a few years after the ToS / SSE platforms are supposed to be combined. Maybe by then they waive the exchange fees and their software will will be more mature like SSE. Runner up if you don’t mind complexity and lacking customer service is IB. Their fees are slightly higher after accounting exchange fees, minimum fees and data fees. However, their professional grade features and their direct market access smart routing may result in making more money on trades.

@rasar ToS mobile app is amazing on iOS. If it’s similar on Android, then I would seriously consider upgrading to a Droid that can run it. It has way more features than their new online version of ToS and it always works, unlike the desktop app.

@borgia I researched a lot of services in decent depth. Steady Options is the all around best IMHO because they cover a balanced variety of high percentage trading strategies. There is zero need to pay for novice to intermediate strategies that can compliment the long Vega and short Theta of the SO portfolio. Just watch the hundreds of hours of YouTube videos about premium selling strategies by ProjectOption, OptionsAlpha, and TastyTrade on YouTube. PO seems the least biased. I wouldn’t pay for OA, and TT is free but stick to only the best best risk/reward defined risk stuff. You can even download the TastyTrade app and use the trade ideas for free, you just have to weed out all the many bad ideas. However, only take their best ideas and leave the rest. Ignore their statements that contradict the results shown in the SO performance track record because they don’t back it up with properly constructed studies. Lastly, if I were going to pay for a strategy that would compliment my long Vega, short theta SO portfolio, then I would look no farther than subscribing to Steady Momentum.

@slego Fidelity finally responded yesterday evening via secure message. The rep apologized for the delay and gave me a more direct number to the active trader sales group (800-544-5115 for any that wants to negotiate lower fees with them). Today I used Schwab's StreetSmart Edge platform to execute a "Walk Limit" order and got filled on the LOW trade at a $1.66 credit. I probably would have got a little higher credit, but I set the walk to start too high at $1.99 and work it's down to a $1.60 at $0.01 price increments every 60 seconds. I should have probably started at $1.89 and walked it down $0.02 every 15 seconds, or something like that. Either way, it is awesome that I could just set the walk criteria and go on about my day instead of having to sit there doing it manually. Nice time-saving feature!

@slego How did you communicate with them? I’ve actually tried 3 times via phone. I get transferred around a couple times but the folks that are supposed to handle it didn’t answer after waiting on hold for again for almost half an hour. Also, do you like their trading software and are you usually getting fills near official price near the time official trades are announced?

500 Free Trades up to 20 contracts each of you move a total of $100k to Charles Schwab. They’ll also negotiate their per contract fee. After this promo, I think they’ll start me at $0.50/contract. Trying to get them lower. Should have it finalized this week. Even if I’m initially stuck at $0.50, their superior order execution quality vs TDA is worth a lot more to me than $0.10/contract lower rate I have with TDA. It could be the difference in getting filled near the official trade price vs missing the trade altogether. TDA’s order routing prioritizes payment for order flow more than Schwab. Schwab’s information claims their order routing strictly prioritizes getting the trade filled and getting it filled at the best price for their customer; the payment for order flow they as a broker can retain is not a consideration in routing decisions. Their customer service has been great to work with too. In contrast, I tried four times to reach Fidelity regarding reducing option trading fees. Two by phone for over a half hour each (did other busy work while on hold), and 2 “secure messages.” I never got through to the specific team that makes option fee decisions, nor have any of them responded. Needless to say, they’re out of the running for my option trading business. Not a significant loss for a company with trillions in assets under management, but a loss to them nonetheless.

@Markuse I believe I was inaccurate regarding PFOF with IB. As you suggested, this disclosure of theirs clarifies that IBK Pro tiered & fixed pricing clients get majority of the PFOF rebated to their order. IB mainly just keeps bonuses for exceeding order flow tiers, which would be hard to divvy our to traders evenly. https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=3074 I think it may be the reduced commission IBK Lite customers that are making up most of the PFOF retained in IB’s 606 report. This means IB’s execution quality advantages probably outweigh their fees. They save IBK Pro traders the wholesale market maker’s spread, they probably rebate most PFOF, their execution speed is as fast as it gets and the even offer algo order types that seek even more price improvements. These points make them a clear winner for traders.

Here’s some recent research I did regarding brokers on their overall execution quality and trade costs. Interactive Brokers Pro was the clear winner, but you can see how well the other brokers stacked up too: https://steadyoptions.com/forums/forum/topic/5969-how-does-payment-for-order-flow-work/?do=findComment&comment=145832

@Markuse I’ve read good things about IB fills and it’ll be one that I try out. Thanks for confirming what I’ve read. IB actually does take payment for order flow too. There 606 report for Q2 2020 actually just posted. Look for the options tables and then at the column that says non-marketable limit orders (bids placed below ask & asks places above bid). https://www.interactivebrokers.com/en/index.php?f=563 They take about a similar amount as others brokers, BUT it’s from the exchanges directly, not from middlemen. By cutting out the wholesalers entirely and using intelligent order routing, IB is known to able to get better fills than most brokers. For this major differentiator, I will be funding an account and trying them out. 😀

@skydragon Thank you for the good suggestion. I have read some good things about them in these forums, but I saw little to no posts mentioning Tradier that were regarding orders filling well when other members’ brokers weren’t. What I’m looking for first and foremost are the brokers that are usually getting fills on our official trades around the time of the alerts. With ToS, I watch level 2 and usually never see my order show up. I’d be ok with that if their wholesalers were getting me filled on some market outside of the exchanges, but they aren’t. Instead, when I watch the price action multiple trades for a couple cents worse than my order get filled, but mine at a better price doesn’t get filled. Unless the price charts and level 2 I’m looking at are inaccurate, then my low cost broker may be costing me more on trades than they’re saving me in fees. The winning trades have tended to be the harder fills that ToS and other members’ “low cost” brokers sometimes aren’t filling as well. Meanwhile, I’m reading posts from over the last several months from members using brokers that really prioritize execution quality such as IB, Schwab and Fidelity, mentioning that they rarely struggle to get filled near the official trade price/time. What’s worse is the losing trades seem to be easier fills because the price drops a lot hours to a couple days later. Not chasing the trades helps keep those to small losers at least, but this is a seemingly subtle effect that can compound into significant return differences for most traders that gravitate towards lowest fee option brokers. Historically, most of the lowest fee brokers have had to make sure they’re maximizing their payment from order flow in order to pay the bills. That bigger payment from order flow has to come from bigger spreads the wholesale market maker keeps. They tend to concentration their order flow routing based on the PFOF the wholesalers gives them instead of the execution quality. The broker retaining more of that PFOF, instead of giving more of it to the trader as price improvement, further degrades their fills. Since their recent class action lawsuit settlements over this, Robinhood and ToS have at least started more evenly spreading their order flow out across their wholesalers a little better so it doesn’t show that they are completely favoring the the ones with highest PFOF. However, I’m petty confident their “smart routing” is now focused on balancing between PFOF for the broker while keeping appearances better to reducing their risks to legal liabilities. I don’t mind the wholesale setup for the brokers that appear using them advantageously for the customer such as Schwab and Fidelity. From what I’ve read, these low cost brokers do the best job of prioritizing the wholesalers that executes best, plus they have an advantage huge internal order flow to execute orders against. These two brokers are able to earn less profit revenue from PFOF because they earn more of their revenue from their wealth management and other businesses than the lowest fee brokers that don’t have as diversified of revenue streams. I don’t know all of these things for certain, they’re my best guesses. My goal is to mitigate my/our disadvantages. I appreciate your insights if you have some to share. 😀

@Ringandpinion Yes, Tom Sosnoff and Scott Sheridan were cofounders in ThinkorSwim and are cofounders of TastyWorks. The user interface of the desktop application is the a step forward in ease of use for active option traders. You can also duplicate trades of his and several other traders which is cool for idea generation. They also have thousands of hours of video mainly regarding selling premium. A lot of what they teach and encourage is good, but although Tom tries his best to be open minded, you can tell it’s a real struggle for his data science team members when there are parts of their studies that he disagrees to based on anecdotal evidence and intuition. Tom is such a good active trader that he seems to be able to roll and maneuver his way from large losses eventually to small ones and the rest of his trades are several dozen tiny wins that would eat you up in commission and time. So I try to cherry pick the trade ideas of their data science guys and the veteran female traders because they don’t let their egos get in the way. As well, despite some great promise, the platform lacks a lot of features that ToS has and tends to have glitches that get left outstanding for a while on new stuff that rolls out. Like I’ve said in other threads, I think their execution may be tiny but better than ToS but I need to prove this with a lot of comparisons to be certain. A tiny bit better execution can make some significant performance improvement in a strategy like SO though. On very rare occasion I might miss a trade on ToS that TW fills but my ToS fees are a lot lower similar to yours. All of that rant, is why I’ve been looking for peoples insights regarding real world execution and cost analysis between the brokers that sound like they have the best options execution and cost combo base on all me research so far: TW, IB, Charles Schwab, Fidelity https://steadyoptions.com/forums/forum/topic/5969-how-does-payment-for-order-flow-work/?do=findComment&comment=145832

How about order execution quality comparisons between TW or ToS with Interactive Brokers, Tradier, Charles Schwab, Fidelity or even Robinhood since they’ve straightened up their act on that this year? Do you guys have any insights there? I’m interesting in using whichever broker does trades for the best overall value consistently. I don’t mind learning a new interface. I’m also especially interested in helpful order types such as Interactive Broker’s Adaptive Algo and Charles Schwabs’s Walk Limit. Any insights there guys?

@CJ912 @DubMcDub @Christof+ @TrustyJules @TooEffingOld @skydragon @SamirG91 @mccoyb53 @ChrisE @Bull3t007 Did you guys have any success doing a group negotiation with TastyWorks? Their fees on top of all of the exchange fees they charge to the customer are surprisingly high. I’m down to $0.40/contract with ToS and will be requesting $0.30/contract in 60 days in hopes of getting to $0.35 and later to $0.30. ToS keeps about $0.15 more payment for order flow, but they don’t pass on all the high exchange fees and they have the potential order execution advantages of using 5 wholesalers instead of 4, plus in house order executions at better than National Best Bid and Offer (NBBO) thanks to trillions in AUM. Potential is the key word there though. Hoping the merger with Schwab improves ToS execution quality to the level of Schwab’s and not the other way around.

Contact this guy listed below if you want options trading fees well below $0.65/contract and help with the ThinkorSwim platform. He’s with TD Ameritrade/Charles Schwab. After fully integrating with Schwab to become the largest broker on the planet by a couple trillion dollars or so, they’ll have the order execution advantage of being able to match even more of their orders directly with other customers in addition to orders fromthe exchanges. This could help your fill prices and speed, especially on stock/ETFs with options that are the most traded by theircustomers, such as SPY, TSLA, BA, DIS, etc... Also, their retail ThinkorSwim desktop and mobile trading applications are best in class for option trading IMHO after trialing several of the top brokers. The one caveat is that he can only help people that don’t already have TDA accounts. If you already have a TDA account, he should be able to put you in contact with the account rep that you never knew you had. These folks earn a residual commission income based on how much assets under management they raise and keep on the platform.  Their team that approves reduced fee levels considers your intended options contract trading volume and your intended new account size. Keep these points in mind when negotiating.  Austin Gansky TD Ameritrade | New Accounts Manager +1 (817)310-5010 Ext. 205010 Office Austin.Gansky@TDAmeritrade.com Disclosure: He’s my account rep. I get no benefit from referring you to him, to my knowledge, other than knowing I helped out fellow members. 😀

Contact this guy listed below if you want options trading fees well below $0.65/contract. He’s with TD Ameritrade/Charles Schwab. After fully integrating with Schwab to become the largest broker on the planet by a couple trillion dollars or so, they’ll have the order execution advantage of being able to match even more of their orders directly with other customers in addition to orders from the exchanges. This could help your fill prices and speed, especially on stock/ETFs with options that are the most traded by their customers, such as SPY, TSLA, BA, DIS, etc... Also, their retail ThinkorSwim desktop and mobile trading applications are best in class for option trading IMHO after trialing several of the top brokers. The one caveat is that he can only help people that don’t already have TDA accounts. If you already have a TDA account, he should be able to put you in contact with the account rep that you never knew you had. These folks earn a residual commission income based on how much assets under management they raise and keep on the platform. Their team that approves reduced fee levels considers your intended options contract trading volume and your intended new account size. Keep these points in mind when negotiating. Austin Gansky TD Ameritrade | New Accounts Manager +1 (817)310-5010 Ext. 205010 Office Austin.Gansky@TDAmeritrade.com