cheapest to do Option Spreads. size 50

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darwin666

hi. i have an IRA. in Tradeking and was about to move it to IB.
but since this is an IRA, and I cant do naked(my strategy) I will need to do spreads.. thats fine.. so I checked saw for example... TK for sa y50 contracts.... a spread will cost me... 5 bucks plus 100 *.65 = 70 $

example SPY at 177.. do a spread of 180 to 185. bear call spread

for optionshouse it is.. 12.5 plus 100*.15 = 28 bucks..

so it seems options house is the best.

IB- with it complex structure . is .70 cents. but assuming smaller leg is under 10 cents.. or may be 5 Cents.. assuming 25 cents commission
make its. 50 * .7 + 50 *.25 = still = 38 $..

so would you guys agree. that options house is good for Doing spreads in the range of 50 contracts..
 
According to the ad that's showing up at the top of this page, OptionsHouse is $8.50 for a ticket charge plus 15 cents a contract, so the cost per side is $4 less than in your example.

Here's the thing that makes an apples v. apples comparison with IB difficult: the rebate you receive for adding liquidity. At 70 cents per option, they're not the lowest price around, but depending on the transaction, you might get a good chunk of that back. I sometimes have a negative sign in the trade's commission column.

Two more to throw in the mix:

TradeMonster is 50 cents per option, no ticket charge, no rebate that I'm aware of. www.trademonster.com/pricing/option-pricing.jsp. For 50 spreads (100 contracts) at a time, unless they negotiate on larger volumes, this might not be a good choice.

LiveVol Securities is 65 cents per option, they offer rebates, but I don't know the details. It gets a little confusing, because one of their clearing firms is IB, and on the surface, they're offering better rates than going directly with IB.
www.livevolsecurities.com/stock-options-trading-pricing

I have accounts with IB, OptionsHouse and TradeMonster and looked at LiveVol Securities. Like anything, they all have their pluses and minuses.

I'm fairly new to OH and TM and don't know all the ins and outs of their platforms yet, but one thing I haven't been able to find on OH is 'bid volatility' and 'ask volatility.' That's important to me because the names/strikes I trade are not as liquid as SPY and the spreads can be wide. OH just displays a single IV (mid?) figure.

On the plus side, I think OH is faster than TM, but TM automatically recognizes your spreads and displays them as such (or you can custom name them). I haven't found a similar feature in OH or IB - they just list the individual legs.

Behind the scenes, they're all getting treated as spreads, but if you have a lot on, it's nice to look down a list and see X strangles, X verticals, X whatever and the spread greeks, rather than a long list of individual legs and individual greeks. In OH and IB you can get aggregate greeks by underlying if you click around a bit more, but I still haven't seen spread greeks.

It all depends on what's important to you...
 
Quote from Brighton:
one thing I haven't been able to find on OH is 'bid volatility' and 'ask volatility.'
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You can just take the b/a spread and divide it by Vega. This said, chances of the implied vol being calculated correctly in a retail broker are pretty low in my view (for starters, vs. the right forward price).
 
Thanks, SLE, that's a good tip.

Another thing to be wary of is whether these retail platforms get the dividend dates and payouts right, esp. with smaller and less liquid names.

I learned the hard way selling some options on a Master Limited Partnership (MLP). After my fill (immediate, of course) I went back and dusted off a simple standalone calculator I've had for a long time. I sold about 20 cents per contract too low because the broker's platform wasn't incorporating the high dividend.

Lesson learned!
 
Quote from darwin666:

hi. i have an IRA. in Tradeking and was about to move it to IB.
but since this is an IRA, and I cant do naked(my strategy) I will need to do spreads.. thats fine..
More...

Do you really understand the risk of naked options?

In an IRA at IB you are allowed long and short futures and long and short futures options.

You can't do naked short SPY options, but you can do naked short ES options.

IB charges $1.42 a contract for ES options (first 1000 sides a month).
 
Quote from jeb9999:

Do you really understand the risk of naked options?

In an IRA at IB you are allowed long and short futures and long and short futures options.

You can't do naked short SPY options, but you can do naked short ES options.

IB charges $1.42 a contract for ES options (first 1000 sides a month).
More...

interesting.. did not know that.. in an IRA.. they allow u to go long and short ES options... but I dont do ES at all. only SPY.

so I think i will stick to Optionshouse since it is the cheapest for a 50 contract spread.. (iron Condor style).
 
Hello,

Does anyone know what options exchanges in IB have the lowest commissions? I would like to switch from smart execution to lowest commission exchanges.
 
I think there was a thread earlier talking about setting IB to seek lowest commission with screenshots and all.

But, its hard to mess with that algo if its already optimized to get you the best savings at any point in time.
 
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