Possibly Moving Option Positions ideal.

Discussion in 'General Discussion' started by Edward, Jul 9, 2017.

  1. Edward

    Edward Well-Known Member

    I am considering the possibility of moving my option positions from Lightspeed to TOS. I trade mostly options on SPX. Lightspeed uses IB as their clearing firm. I have the option of using LiveVolX or the TWS trading platforms. I am suppose to get .50 cent per contract at Lightspeed but shockingly the exchange fees & Regulatory fees for me seem more then the broker fees themselves!! These fees seem to vary greatly. I think it depends on if you are adding or taking liquidity and if you are trading weekly SPX or monthly SPX options. Here are some real examples: 28 contracts - Total Fees - 28.93, 4 Contracts - Total Fees - 6.53, 4 Contracts - Total Fees - 4.12, 16 Contracts - Total Fees - 18.13

    As you can see .50 per contract is actually a smaller portion of the total. I was able to negotiate with TDAmeritrade $1.00 per option contract without a base commission and WITHOUT exchange fees. I should save a little with SPX options. I like the TOS platform and the Android App has evolved to do complex options. The stickler is they want $175,000 in position and cash value in the new trading account before the agreed upon commission rate will kick in. Otherwise I trade at a higher commission rate.
    I have Reg-T Positions and cash serving as margin at Lightspeed\IB. To do a complete transfer take at least 10 days. This means that you cannot trade or adjust those positions for at least 10 days or more. Normally this would be a rather dangerous position to take for an option trader. However I am thinking of a possible innovative solution. I could fund the TOS account with enough funds to do adjustments with TOS for two weeks. When the IB option positions flows into TOS options positions that oppose each other they should cancel and options that are the same should add to each other. For example if the IB position is short 31 Aug 2400/2350 and I do an "adjustment" trade in TOS with long 31 Aug 2375/2350 my conjecture is that the 2500 Put will disappear because you can't have two opposing positions in the same account. The resulting positions at TOS should be Short 2400/2375 Put after the position transfer into TOS.

    I would be transferring a Reg-T account to a Reg-T account. The adjustments can be broken down to credit or debit verticals at TOS. On the IB account I sometimes I buy a naked Long Put for protection. In those instances I think I would need to close the Long Put at IB because I would be way over margin if I shorted a naked put at TOS. I could transfer the remaining cash later. I need to confirm with TOS if they take whole options at once. THEY SHOULD. They have more Savvy programmers at TOS.

    Incidentally IB internal transfer of positions is instantaneous. However for options the option internal transfer process is RATHER STONE AGE(Really). Even though you specify a set of positions for internal transfer the system actually transfer one option position at one time!!! So if you select a vertical to transfer and the system transfers the short first the receiving account will be over margin and the transfer stops. If the system transfered the long position first
    the sending account will be over margin because it will be net short and the transfer stops. Remember this is an internal IB positions transfer between account you own!!! I told them about this problem but I doubt if they will do anything. I once told them about a major bug in their Android app. It took them years to correct it.

    Regardless, does anyone see any problems with what I am "considering" to do? I believe I have enough cash funds to do adjustment at TOS for two weeks and even open a new trade.
    Last edited: Jul 9, 2017
  2. Marcas

    Marcas Well-Known Member

    I do.
    Not being an expert or anything.
    1. I don't know what size you trade. For what you showed you will not gain much. If this is only reason I would reconsider - financial status of broker is important. (I'm not suggesting anything here at all.)
    2. Try renegotiate TOS commisions. Be tough. It doesn't seem that you have extra deal. I'd think with 175K you should get .75 at least. But still, I don't know what is going on today with 'broker's war'.
    3. Reconsider moving cash only, even if you have to wait longer. Or close positions at Lightspeed and reestablish at TOS after transfer. You have to eat up commissions but potentially save yourself a lot of headache.

    I use TOS (and others), I don't know Lightspeed. I don't care for platform features as much as before. I want good commissions and good execution (and security from MFGlobal type of things). Any ideas anybody?
  3. Edward

    Edward Well-Known Member

    I am not sure if my "conjecture" on subtracting or adding option positions by moving it into another account is even possible. In "theory" it should work. I would need to ask the transfer department at TOS. I am still negotiating with TOS. The slightly reduced commissions at TOS is not the sole reason for the possible transfer. ( I may get it reduced more). Like I stated I like ThinkorSwim and I like what they done with their smartphone platform. -- F.Y.I. I am re-negotiating with Lightspeed as well. Although I done know of any option trader getting lower then .50 cents per contract. However TOS is going to Eat the exchange fees and the CBOE exchange fees are a nasty sticker shock.

    As for the broker's financial stability, I venture to guess that TD Ameritrade is more secure then Interactive Brokers.

    Does anyone know if my "Theory" of moving option positions is possible or not?
    Last edited: Jul 9, 2017
  4. ACS

    ACS Well-Known Member

    Information Regarding SIPC Coverage
    1. Interactive Brokers LLC is a member of SIPC.
    2. SIPC protects cash and securities held with Interactive Brokers.
    3. SIPC does not generally cover commodity futures or options on futures.
    4. SIPC protects cash, including US dollars and foreign currency, to the extent that the cash was "deposited with Interactive Brokers for the purpose of purchasing securities."
    5. SIPC does not generally cover cash or foreign currency that is not "deposited with Interactive Brokers for the purpose of purchasing securities." For example, SIPC does not generally cover cash in commodity futures trading accounts.
    6. Interactive Brokers is not able to make any statements or representations about how cash deposited into a securities account in connection with forex trading or swept from a commodities account would be treated by SIPC. SIPC protection would depend in part on whether the cash was considered to be "deposited with Interactive Brokers for the purpose of purchasing securities." Interactive Brokers expects that at least one factor in deciding this would be whether and the extent to which the customer engages in securities trading in addition to or in conjunction with forex or commodities trading.
    Account holders seeking further information should refer such inquiries to their own legal counsel or SIPC.
  5. Edward

    Edward Well-Known Member

    I am not seeing your point. I am contemplating a withdrawal from IB to TOS.
  6. PK

    PK Well-Known Member

    In theory you can move options. In practice, I would not do it. I once tried this with a small account from IB to another broker. A big, big mess and a loss of time. The second time, I decided to gradually clear my positions on an old IB account along 3 months and withdraw cash every month to my associated bank account (IB charges extra fees for more than one cash transaction per month). In parallel I funded the new account by transferrring money from my bank account once I received the cash from IB. Sounds prehistoric, but it worked without problems. There have been some comments on this topic on this forum elsewhere. Among other comments I remember Tom Nunamaker recommending NOT to transfer positions, but rather transfer cash.
    Chaitanya likes this.
  7. DGH

    DGH Administrator

    I agree with PK and others. I have moved securities and ETFs with minimal problems, but moving options is a different matter. I don't recommend it.
  8. Harry

    Harry Well-Known Member

    As long as you can mentally remember how the account is split, and as long as do not run afoul of the margins, I do not see this an issue. Of course try to execute this in small number of steps if possible: maybe start by moving a big (logical) chunk to start with, and end by closing and recreating the last big chunk of positions rather than have it linger around for weeks. I do not know how complex your positions are but let us say it takes you 6 weeks to roll everything over in an ideal situation, bite some transition costs and double your first tranche and double your last tranche and double your last tranche and get it done in 4 weeks. I tried opening some trades in IB as I do not want too many positions in TOS in a single scrip - it confuses me - it is not a happy scenario managing multiple platforms especially when TOS mobile is just awesome in terms of creating orders - take whatever route you need and then see if you can shorten it.

    But then, why do you need to move any position? Open the new ones at TOS and keep the old ones at IB until they close. Mentally it is much easier to keep track of and if I were in that situation, this is what I may do.
  9. Edward

    Edward Well-Known Member

    Hi Harry,
    My very first thought was to open only new trades at TOS and do adjustments, closing and expirations of existing trades at IB. This is the traditional easier, SAFER approach. However, I will be paying a higher TOS commission until I reach a certain account value at TOS. I started this post to ask the experienced CD community about the "possibility" of moving the complex option positions from IB to TOS and then funding & doing the adjustments to the old positions at TOS rather then at IB during the the 2 week transfer period. -- The "THEORY" was that the TOS adjustments will add & subtract from the incoming IB positions during the 2 week transfer period. Using this approach the ideal was I would only pay for just 2 weeks of higher TOS commission instead of maybe 5 month of higher commissions.

    --- Actually I have a feeling that the TOS adjustments will -NOT- subtract from the incoming positions. For example If I had a Short 31 Aug 2400P at TOS and my Incoming IB position is Long 31 Aug 2400P the result may NOT be a closed position but two separate positions. I would need to confirm with TD Ameritrade transfers department on how the Long 31 Aug 2400P will enter into the account in this instance. They should be open weekdays.

    Please note: I am just negotiating with TOS. I have not decided on switching brokers yet. I could stay at IB.
  10. Harry

    Harry Well-Known Member

    Sure and your post motivated me to negotiate harder. I had actually started a conversation with thinkorswim team last week, they offered me pennies and I just sent a threat to move response after seeing the discussion above. Let us see.
  11. Harry

    Harry Well-Known Member

    Ha ha victory :)
    I actually started talking to TOS about futures fees where they offered something but I was not happy with that so used some of the ammunition from above and it worked in lowering my option rates. Nice day even though market moved against me :)
  12. Edward

    Edward Well-Known Member

    Me too. I lowered mines at my existing broker to .45 cents per contract when I hinted I wanted to move to TOS. ( I still like TOS's platform and mobile app). Doing SPX complex orders cost .66 per contract at the CBOE so on a per contract basis it is still more at my existing broker. We'll see later. However if I should experiment with complex options on stocks in the future I wouldn't have to pay the high CBOE fees.
  13. RJM

    RJM Guest

    Do not consider any move without first looking (hard) at Tastyworks. Tom Sosnoff has the original development team from TOS working at Tastyworks now, and I think you can get a comparable rate on commissions (or better).
  14. Harry

    Harry Well-Known Member

    I have had my bad moments with TOS, but all said and done I am still there because I have looked at 4-5 platforms and TOS mobile platform is so superior and so continuously improving that Sosnoff's team (and other brokers) will need at least a year to catch up. Just my guess based on limited usage (but multiple attempts) of other platforms.

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