Data Feeds - How important is it to use your broker's info?

D

darkshogun

I really like OptionHouse's commission structure but hate their risk analysis graph. If I end up trading with them I would use third party software for analysis. OptionHouse doesn't have a plugin available to stream their feeds. After experimenting with OptionsOracle, I see, as expected, the prices are not the same.

How important is it to use your broker's feed to make trading decisions, or will other feeds work just as well?
 
Another question: I'm testing both ThinkorSwim and the OptionsHouse platforms. In the off hours, when the market isn't trading, the options of both platforms are identically priced with one another. However the deltas of identical positions are not the same. They're off by around .02 or .03. A big difference. Also the implied volatilities of each option are a bit off from each other as well.

I love the TOS platform but their commissions are completely unreasonable. They're so bad and cut into potential profits so steeply that I don't understand why anyone would want to trade live with them. When I'm ready to go live I may open an account with TOS merely to use their risk analysis features while placing actual trades on Optionshouse. But if the deltas are off this much I'm not sure how well that'd work.

Anyone here use TOS for positions analysis and trading decisions, while using another broker to place live trades? How well does that work?
 
Option House and TOS are retail platforms. Their Ivol feeds are not going to adjust for current interest and dividend flows, so deltas and shown Ivols will be off a little.

-Do you really need more accuracy to make trading decisions?
-Are you trading delta neutral?

BTW, how do you know they are wrong? What are you comparing them to?

1245
 
1245 said:
Option House and TOS are retail platforms. Their Ivol feeds are not going to adjust for current interest and dividend flows, so deltas and shown Ivols will be off a little.

-Do you really need more accuracy to make trading decisions?
-Are you trading delta neutral?

BTW, how do you know they are wrong? What are you comparing them to?

1245
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Yes, close to delta neutral. Very important to be precise. I'm not saying they're wrong either. I'm comparing them to each other. They have identical prices in their options chains for each strike (at least on SPY), but their implied volatilities and delta numbers are not identical to each other.
 
darkshogun said:
Yes, close to delta neutral. Very important to be precise. I'm not saying they're wrong either. I'm comparing them to each other. They have identical prices in their options chains for each strike (at least on SPY), but their implied volatilities and delta numbers are not identical to each other.
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I've been trading options since the early 80's. Every platform will provide different Greeks. The best way to test the accuracy is to look at the ATM IVols. Puts and call should be close. If the are not the platform is not adjusting for market interest and dividend flows. BTW, I said close, not the same. Also, the platforms don't allow you to ajust for your cost of interst. Your long/short rate will be much wider then a floor MM or prime broker trading for their own account.

1245
 
darkshogun said:
Yes, close to delta neutral. Very important to be precise. I'm not saying they're wrong either. I'm comparing them to each other. They have identical prices in their options chains for each strike (at least on SPY), but their implied volatilities and delta numbers are not identical to each other.
More...

If the difference in calculation is that important to you then you are better off doing it yourself. Most banks and market makers (for whom it is very important because it defines their ability to be competitive) will run their own pricing models for that reason.

But you should be asking, how important is it really? All the models are more or less the same (to within a few deltas). The most important input is the implied vol you are using, so focus on that.
 
I’m not sure what’s causing your issues but some of the retailers, (Trade King and Options Express) base their geeks on last price. Options Oracle bases on last price also but will adjust when you select a buy or sale. In other words the greeks will be based on whether or not your quoting the bid or the ask. Sometimes this can be quite significant.
 
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