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Lower Transactions Costs

Discussion in 'General Discussion' started by Jay Hattler, Mar 14, 2016.

  1. Jay Hattler

    Jay Hattler Well-Known Member

    I am considering changing brokers (I have been with eTrade for a long time) and I am wondering what is achievable in terms of negotiating low options transaction fees. I am aware of all published fees with the typical brokers, but would like to know what others have done in terms of going below these published fees. My ideal situation would be:
    -- decent per-contract fee (75 cents?, 50 cents?).
    -- No base cost like the $9.99 I currently pay with eTrade per trade. This base cost too often distorts a minor adjustment like adding a 1- or 2-contract spread to adjust the delta on a position.
    -- no fees for exercise
    -- no fees for assignment. Again, the fees distort any decision to use an ITM spread close to expiration.
    -- no fees for cancellation

    What I can offer to a broker is a mid-six-figure account and probably 1,000 contracts per year in transactions.

    I would welcome thoughts on what I should expect and which brokers I might approach.

    Jay
     
  2. Scott Slivnik

    Scott Slivnik Well-Known Member

    Jay, where are you located? If you are in the US, I recommend Interactive Brokers based on your criteria. At IB, you would pay $1.24/contract for single contract legs and $0.94/contract for multi-contract legs when trading RUT. My understanding is SPX is a bit more expensive.

    I pay $1.25/contract at TD Ameritrade. I tried IB late last year for a short period but decided the ThinkOrSwim platform was worth the higher cost (difference was small).

    TD Ameritrade charges exercise and assignment fees and IB does not if my memory is correct which is why I recommended IB.
     
  3. Jay Hattler

    Jay Hattler Well-Known Member

    Yes, I should have mentioned I am in the U.S. Thank you for your reply. I looked at IB, but must have missed that they do not charge for exercise/assignment.
    Jay
     
  4. Rick

    Rick Active Member

    I have several accounts with TD Ameritrade at $1.00/ contract. I also have an account which started with Trade Monster (now OptionsHouse) and is still at $0.50/contract. No ticket charges with either brokerage.
     
  5. Scott Slivnik

    Scott Slivnik Well-Known Member

    I ask my TD Ameritrade rep. about $1.00/contract every time he calls to try and sell me services. No luck yet but not surprised as I have a general idea what they are looking for volume wise, and I am not there yet.

    I looked at OptionsHouse a couple years ago and they refused to give me pricing without a base charge, so I never opened an account. Do they provide a solid platform?

    Jay definitely should be able to obtain lower fees can I can.
     
  6. Rick

    Rick Active Member

    I opened the Trade Monster account a few years ago to have the diversity of two brokerages and to take advantage of the low commissions if I did IWM or SPY trades. I was with SOM then and they offered $0.50 to everyone as I recall. The platform was ok and I only did a few RUT trades with it but I didn't like the fact that it was web-based vs local like TOS. Also the analytics couldn't compare to TOS nor the ability to do various contingent orders.
    I have not used it since OptionsHouse has been involved.

    I closed my IB account years ago when I ceased trading futures and never did any options trades through them.
     
  7. runmael

    runmael Member

    Did you try to negotiate a better commission price with your current broker? If you are a longtime customer with a plan to trade at the same rate you should ask to get your commission cost reduced. As an alternative, you can present the costs of their competitor.
     
  8. Boomer34

    Boomer34 Well-Known Member

    What type of volume do you have to be pushing to be the $1/contract?

    Ballpark?
     
  9. Scott Slivnik

    Scott Slivnik Well-Known Member

    This is purely a guess based on my personal volume and looking at the T-Logs of others on this forum and elsewhere that currently have the $1/contract rate at TDA. My guess is $3-4K annually at $1.25/contract (minimum).

    I have had several discussions on commissions with my TDA rep. It is not difficult to get decent rates, however, TDA has no desire to offer competitive rates. The reason I was given is they offer services that other brokers do not. 100% self-directed traders/investors is not TDA's primary market.
     
  10. Kevin Lee

    Kevin Lee Well-Known Member

    TradeMonster offers the lowest rate I know of $0.50/lot and no ticket charge. But I stopped using them few years ago despite the low rate. Reason is their platform wouldn't allow trades to step on each other. For example - if you have a 950/1000/1050 butterfly on and you want to add another butterfly let's say at 1000/1050/1100, TM's platform will reject the order. Reason is the 1000 and 1050 strikes cancel out.

    This type of order is not an issue in TOS. I debated with TM's tech support multiple times why this should be a legal trade without any success. It became too difficult, so I just withdrew my money.

    But that was several years ago though. I'm not sure if it's still the case now.
     
  11. Capt Hobbes

    Capt Hobbes Well-Known Member

    FWIW, I have a small account with OptionsHouse which merged with TradeMonster a couple years ago and started using their platform. There doesn't appear to be an issue with overlapping trades these days, but there is now a $4.95 ticket charge.
     
    Kevin Lee likes this.
  12. Andrei

    Andrei Well-Known Member

    Here is my experience:
    - TD will lower their commissions, but grudgingly and only after they see some volume. I am still trying to get rid off the ticket charge with no success, although they have lowered it along with per option charges.
    - TM (now OH) I have used them, but stopped for three reasons: 1) did not like their platform, just not for me, 2) I trade mostly SPX and RUT and they charge exchange fee for each contract, TOS does not. So price difference is not significant. 3) Most important: to get PM you need to put in $400K into the account. TOS and IB only require about $150K.
    - IB, I have an account with them which I use for occasional foreign transactions. I like their commission structure, but not a big fan of their platform.

    The bottom line is that 90% of my trades is with TOS.
    Just a suggestion: try to negotiate with TD before you transfer the account, if it is big enough, they may budge a little.
     
  13. Tim

    Tim Well-Known Member

    Here's my experience.

    TD has become really stingy in the last few years on negotiating commie. I, and a few others on my behalf at my urging and counselling have tried. Lately they wont even reduce from 1.50 a contract and no ticket fee until you meet their "formula", which is a volume something like 1000 contracts a month. To try to go from 1.00 to .75 it is something like 1500 contracts a month.

    I have seen people threaten to transfer a million dollar account away and still they wont budge on the commie until you meet the formula. One explanation was, in a low interest environment the size of the account doesn't matter since they cant make any interest off it.

    About once a year my local TD rep calls to try to sell me services too. Every time I ask to reduce my commie and they cant or wont do it.

    Incidentally I have experience trading options at Schwab and OptionsXpress (owned by Schwab). Schwab's platform (StreetSmart Edge) is mid-grade, not as good as TOS but better than IB or TM in my opinion, and more importantly Schwab is very good at execution. I have had identical orders in at Schwab and TOS at the same time, and Schwab gets fills and TOS doesn't. Schwab frequently gets better pricing by a few pennies. OptionsXpress' platform is just a notch below Schwab's, but it works and can be used.
     
    Al G. likes this.

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