Do some brokers sell you 1 option contract at a time to run up commissions?
- Thread starter Option Trader
- Start date
Nothing to do with where they are routing the orders, rather:
if bid is $.30 and ask is $.40, and one is trying to buy at bid 50 options at $.30, having one contract being sold to you, costing a $10 minimum ticket price, and then the same happening several times over the course of days/weeks.
if bid is $.30 and ask is $.40, and one is trying to buy at bid 50 options at $.30, having one contract being sold to you, costing a $10 minimum ticket price, and then the same happening several times over the course of days/weeks.
Of course it can matter where the orders are routed. PACX used to be the worst for these odd-lot fills, while CBOE never did. At the time, there were better incentives for some brokers to route to PACX as I recall. Also, it seemed to be when I improved the market to the NBBO on PACX, since there was no MM in that particular class willing to make a tight market (on either side).
Listen to the experienced traders - if you think someone is trading specifically against you, and you're not yet doing/quoting 10% of the volume in an instrument, you're being paranoid.
Listen to the experienced traders - if you think someone is trading specifically against you, and you're not yet doing/quoting 10% of the volume in an instrument, you're being paranoid.
Of course nobody is trading "against me". Look from this hypothetical example: if a broker has 5,000 clients per day who place option orders to buy at bid and/or sell at ask, and these clients are charged $10 ticket charges per trade, they would make $50k per day just by selling one option to each guy. Again, the reason I am proposing this possibility is because by a broker who doesn't have any ticket charge, this stuff has not happened, while the one(s) with ticket charges it has happened quite frequently.
You don't think they know what to do about risk, with deltas and gammas? If so, they don't belong in the business.
Even without deltas and gammas, there is a simple arbitrage profit if two clients placed orders, one at $.30 to buy at bid, and the other at $.35 to sell at ask, to sell one contract to the $.30 guy, and to buy to close from the $.35, and lose $.05 on the trade, but make $20 on ticket charges alone.
BTW, I must admit that I am impressed with your choice of words and command of the english language.
Even without deltas and gammas, there is a simple arbitrage profit if two clients placed orders, one at $.30 to buy at bid, and the other at $.35 to sell at ask, to sell one contract to the $.30 guy, and to buy to close from the $.35, and lose $.05 on the trade, but make $20 on ticket charges alone.
BTW, I must admit that I am impressed with your choice of words and command of the english language.
option trader whats the purpose of this note? #1 if you want the whole order filled do an all or none but the problem is many times you won't get anything filled on an illiquid contract. #2 i don't see the problem as your solution is just trade with ib who has the best fills in the game and a $1 min. i have an account with another big option broker. i've tried duplicate trades at least 100 times in the past 4 months. lets say a contract is $3 x $3.30. the other b roker i'd put the order in first at $3.20 to buy. 95% of the time i'd not get a fill period.when no fill i'd cancel and renenter with ib. i'd get a fill instantly50% of the time at $3.20. i confronted this broker and they refused to tell me were the orders were routed as its propritary info they said. they are selling order flow is why i get no fill were ib isn't. i do between 500-1000 contracts amonth with ib and they're the best i've seen
The $1 instead of $10 ticket charge is a clear advantage by IB over some of the other heavy ticket charge brokers, only you've got cancellation charges.
Currently, we have an arrangment with no ticket charge and no minimums (not even $1) with a broker with a special negotiated rate. They not only don't sell order flow (and also are not MM's), but is what brought about this thread, after noticing the difference.
Anyone who has experience with options with many brokers who can confirm these findings would be appreciated.
Currently, we have an arrangment with no ticket charge and no minimums (not even $1) with a broker with a special negotiated rate. They not only don't sell order flow (and also are not MM's), but is what brought about this thread, after noticing the difference.
Anyone who has experience with options with many brokers who can confirm these findings would be appreciated.
well ib is really 75 cents a contract and i'd hope you're doing at least a 2 spot. yes ib has cancel fee's which are a pain but if you trade a lot they shouldn't ever come into play. you say you have a neogotiated rate which implies you got to be doing 2-5k contracts a month which doesn't apply to 99% of the board. people don't dunerstand thye min commissions is huge and allows one to scale. i rememeber in the 90's $25 min's would kill me as they mad eme buy 10-20 contracts at a time which got me in trouble