What would you do in my situation? I like to trade (close to) delta neutral butterflies with long calls/debit spreads to balance the deltas, and take profit at 8 -10 % of planned capital, which is $4000 per butterfly. I shoot for $320 to $400 per butterfly. The problem is commissions. Butterfly traders are hit hard by commissions, especially when you take smaller profits to reduce risk. My favorite platform is TOS, but their commissions are just awful. It would be hard just to break even on a winning trade with them if I have to make adjustments/open, close out positions during the life of the trade. They would take 1/5 of my profit even without adjustments. I talked to them on the phone, they aren't willing to budge on their commissions. I told them I'm thinking about OptionsHouse because of their great rates, and they basically accused OptionsHouse of being a brokerage that trades against their clients, whereas they, TOS, send orders straight to the floor. They said that's why their rates are so low. I'm not going to take their word for it because they're competitors and would probably lie about each other. But having traded Forex in the past, I'm very keen to avoid brokerages that would be trading against my positions, and therefore have a stake in wanting me to lose.
Another brokerage I'm considering is eOption. Their commissions are great ($.10 per contract). But I know little about them and they don't have a demo platform. I know IB is professional but they're still a little high at about $.70 per contract.
Any thoughts on brokerages like OptionsHouse and eOption? Are they bucketshops that take the opposite positions of their client's trades? Why are their prices so low compared to the other larger brokerages?
The basic conundrum is this - I can go with a lower commission broker and trade SPY/IWM (which I would prefer to do because of the liquidity), or go to one of the bigger brokerages (IB, TOS) and start out trading 1 butterfly SPX/RUT positions with SPY/IWM calls to control deltas, in order to avoid the huge commission hit. But I'm a bit worried about trading SPX/RUT because of the wide spreads and less liquidity. I'd be worried about being able to get out of a position quick when the market makes large, unfavorable moves.
What would you do in my situation if you were trading these strategies and needed a good commission rate but want to avoid bucketshops? Any thoughts on SPX/RUT vs SPY/IWM?
Another brokerage I'm considering is eOption. Their commissions are great ($.10 per contract). But I know little about them and they don't have a demo platform. I know IB is professional but they're still a little high at about $.70 per contract.
Any thoughts on brokerages like OptionsHouse and eOption? Are they bucketshops that take the opposite positions of their client's trades? Why are their prices so low compared to the other larger brokerages?
The basic conundrum is this - I can go with a lower commission broker and trade SPY/IWM (which I would prefer to do because of the liquidity), or go to one of the bigger brokerages (IB, TOS) and start out trading 1 butterfly SPX/RUT positions with SPY/IWM calls to control deltas, in order to avoid the huge commission hit. But I'm a bit worried about trading SPX/RUT because of the wide spreads and less liquidity. I'd be worried about being able to get out of a position quick when the market makes large, unfavorable moves.
What would you do in my situation if you were trading these strategies and needed a good commission rate but want to avoid bucketshops? Any thoughts on SPX/RUT vs SPY/IWM?