Best brokerage for SPX options trader

[m0gambo]

Thanks for all your replies, specially Robert Morse.

Just to clarify, my capital is barely 7 figures so I don't qualify for prime accounts. My trading strategy is just very commission heavy.

I was interested in experiences from people who have used TOS. I've read that some people have been able to negotiate $1 or sub - $1 per contract without ticket charges, so I was curious whether they eat the SPX CBOE charge or add it as an extra.

 

[JSOP]

Thanks for all your replies, specially Robert Morse.

Just to clarify, my capital is barely 7 figures so I don't qualify for prime accounts. My trading strategy is just very commission heavy.

I was interested in experiences from people who have used TOS. I've read that some people have been able to negotiate $1 or sub - $1 per contract without ticket charges, so I was curious whether they eat the SPX CBOE charge or add it as an extra.

Take a look at Tastyworks. https://tastyworks.com/ They might have something for active traders like you who do a lot of trades but account size is not there yet (I am sure that will change soon ) to qualify for prime or institutional.

I just hope you are not on one of their restricted country list.

 

[JSOP]

IB won’t negotiate. I was in a similar situation w them about 10 years back. I was paying 300-400k in pure(ex exchange fees) commish to them and they couldnt care less to accommodate me.

At your volume you should look at the CBOE trading permit and cut your exchange fee as well.

IB is a joke. They are an oversized bucketshop that doesn't give a crap of what you want. They tout themselves as discount broker but their commissions and fees are hardly "discount" anymore.

 

[FSU]

First, if you are doing over 10,000 contracts a month, you can sign up for the CBOE's frequent trader program and they will rebate you 3% of your exchange fees

http://www.cboe.com/products/frequent-trader-program-cboe

TOS charges an all in amount per contract (or at least they do for their legacy traders) and they did negotiate sub $1 rates with no ticket charge. So you may want to try to negotiate with them. If you are able to get this rate, it really cant be beat, as you are saving the average of about a .61 exchange fee charge. Smaller spread orders will be routed to the COB as well, so you will have the same fill no mater what broker you use.

 

[FSU]

IB won’t negotiate. I was in a similar situation w them about 10 years back. I was paying 300-400k in pure(ex exchange fees) commish to them and they couldnt care less to accommodate me.

At your volume you should look at the CBOE trading permit and cut your exchange fee as well.

This is not an option. A trading permit will be in the $7,000 a month range for the SPX and you will be required to be a registered broker dealer, provide quotes, and find a clearing broker.

 

[rallymode]

That is not going to work.

Yes, my bad. I hold a permit for their CFE products and just assumed their options permit would have similar reqs but it seems it's a lot more involved and they don't hand that out as easily.

 

[Robert Morse]

Futures are much easier to be a member.

 

[Sig]

Just to be clear - cheapest or best. If execution quality is an issue with size trades consider a prime or bank with a dedicated SPX desk. Cheapest is a dime over fees.

I hate the desk when it comes to SPX options! In thousands and thousands of trades I've never had a price improvement when my order gets "sent to the desk" and I do miss out on the electronic exchange as my order just sits there. In the end I have to break it up into smaller chunks so it doesn't get flagged by that broker to be sent to their desk, at which point it executes immediately at the price where it sat at the desk. So although good advice in general, I'd say avoid a desk at all costs when it comes to SPX options.

 

[FSU]

I hate the desk when it comes to SPX options! In thousands and thousands of trades I've never had a price improvement when my order gets "sent to the desk" and I do miss out on the electronic exchange as my order just sits there. In the end I have to break it up into smaller chunks so it doesn't get flagged by that broker to be sent to their desk, at which point it executes immediately at the price where it sat at the desk. So although good advice in general, I'd say avoid a desk at all costs when it comes to SPX options.

Sig is spot on with his advice. Absolutely correct. You almost never want your order routed to a broker in the SPX, unless you are doing supper size and you are able to speak directly to him about the order.

 

[sle]

So although good advice in general, I'd say avoid a desk at all costs when it comes to SPX options.

General idea is that you can get an improvement if you put the dealer in comp with other dealers (ie you are covered by multiple desks directly). If you get your execution process well figured out, you can literally trade at mid every other time.

PS. I realize that my experience is not applicable since the dealer would not be quite as “friendly” to a smaller account