Finding a good broker for iron condor trading

hefir · Jan 4, 2012

I need some help in finding a "good" broker for trading iron condors and butterflies.
Here is what "good" means to me:
- Direct support for analyzing (P/L graphs, etc.) iron condors
- Order entry (and exit) for an iron condor rather than two spreads or, even worse, leg by leg
- Direct order execution
- Reasonable commissions.

For example, I grade thinkorswim B+ for the analysis and trade platform but D for ridiculous commissions. I grade Optionshouse A for commissions but D for iron condor analysis and order management (instead of allowing you to build the iron condor you want, they prescribe a list of iron condors that only suicidal traders would trade).

Is there anyone who combines a thinkorswim platform quality with Optionshouse commissions and IB's quality of execution?

Thank you for any leads or just an opinion.

roreilly · Jan 4, 2012

Quote from hefir:

. . .I grade Optionshouse A for commissions but D for iron condor analysis and order management (instead of allowing you to build the iron condor you want, they prescribe a list of iron condors that only suicidal traders would trade).

I am not sure if I understand what you mean. OptionsHouse certainly lets you enter four legs on one ticket; I've done it. Just hit Add Option Leg on the Order ticket entry screen.

I find that supplementing OptionsHouse with SamoaSky's free OptionsOracle software works well. OptionsHouse's Spread Investigator does not seem useful, I agree.

I would be interested to hear other opinions on options brokers with regard to ICs and spreads.

JJTC · Jan 4, 2012

I did the same analysis myself 6 months ago. Take a look at Trademonster, it's what I decided fit me best. I left TD Ameritrade for the commissions, though I also liked Think or Swim.

Anyway, the analysis is good but maybe not quite as good as Think or Swim, the commission structure is much better. Since i'm relatively new to this site, I don't think i can post a link without getting banned,

But I'm sure you can find the commission structure for TradeMonster and compare for yourself.

hefir · Jan 5, 2012

Quote from roreilly:

I am not sure if I understand what you mean. OptionsHouse certainly lets you enter four legs on one ticket; I've done it. Just hit Add Option Leg on the Order ticket entry screen.

This is what I mean. The profit target (or width in Optionshouse parlance, is usually determined by the implied volatility and not by the platform prescription (1 to 6 in optionshouse case). For example, at current volatility and 1 standard deviation, the profit target for NDX is around 300 points while Optionshouse allows 25*6 = 150 max. The same is true for all other underlyings that produce a reasonable premium. Thus, the iron condor feature in Optionshouse is practically useless.
As for building the IC leg by leg, I suspect (but don't know for sure) that there would be some other problems with this. For example, if I want to put the buyback order, can I do this for the entire condor or for each spread separately? The latter would be unacceptable to me. What is your experience?

hefir · Jan 5, 2012

Quote from JJTC:

I did the same analysis myself 6 months ago. Take a look at Trademonster, it's what I decided fit me best. I left TD Ameritrade for the commissions, though I also liked Think or Swim.

One of the elite traders whosounded like an expert told me that Trademonster has bad execution because they are more interested in making money from routing orders than in high quality order execution. What is your experience?

roreilly · Jan 5, 2012

Quote from hefir:

This is what I mean. The profit target (or width in Optionshouse parlance, is usually determined by the implied volatility and not by the platform prescription (1 to 6 in optionshouse case). For example, at current volatility and 1 standard deviation, the profit target for NDX is around 300 points while Optionshouse allows 25*6 = 150 max. The same is true for all other underlyings that produce a reasonable premium. Thus, the iron condor feature in Optionshouse is practically useless.
As for building the IC leg by leg, I suspect (but don't know for sure) that there would be some other problems with this. For example, if I want to put the buyback order, can I do this for the entire condor or for each spread separately? The latter would be unacceptable to me. What is your experience?

For order buyback, the simplest thing to do is to "replicate" the original order, which is an option when I click on the original order, and then simply reverse the buy and sell.

And you can certainly buy back the entire order on a single ticket.

As for the screening software, I shouldn't comment, because I haven't spent much time using it.

hefir · Jan 5, 2012

Quote from roreilly:

For order buyback, the simplest thing to do is to "replicate" the original order, which is an option when I click on the original order, and then simply reverse the buy and sell.

And you can certainly buy back the entire order on a single ticket.

As for the screening software, I shouldn't comment, because I haven't spent much time using it.

Thank you very much for sharing your experience. Apparently, I gave up too early.
By the way, in my previous message I meant "profit range" (the difference between short call and put strikes) rather than "profit target." Sorry

JJTC · Jan 5, 2012

Quote from hefir:

One of the elite traders whosounded like an expert told me that Trademonster has bad execution because they are more interested in making money from routing orders than in high quality order execution. What is your experience?

For fills on IWM,SPY and other high volume ETF's and Stocks I think the fills are usually great, right at the midpoint, maybe a penny difference.

NDX and SPX fills are more hit and miss, I often get great fills, but there are days(like today) that I can't seem to get filled at anything that seems good to me.

I can only compare to Think or Swim(TD Ameritrade), because that's the only other one I have used a lot. The fill seem as good or better with TradeMonster, commisions are much lower.

Hope that helps

hefir · Jan 5, 2012

Quote from JJTC:

For fills on IWM,SPY and other high volume ETF's and Stocks I think the fills are usually great, right at the midpoint, maybe a penny difference.

NDX and SPX fills are more hit and miss, I often get great fills, but there are days(like today) that I can't seem to get filled at anything that seems good to me.

I can only compare to Think or Swim(TD Ameritrade), because that's the only other one I have used a lot. The fill seem as good or better with TradeMonster, commisions are much lower.

Hope that helps

Thanks, it does

atticus · Jan 5, 2012

Quote from hefir:

This is what I mean. The profit target (or width in Optionshouse parlance, is usually determined by the implied volatility and not by the platform prescription (1 to 6 in optionshouse case). For example, at current volatility and 1 standard deviation, the profit target for NDX is around 300 points while Optionshouse allows 25*6 = 150 max. The same is true for all other underlyings that produce a reasonable premium. Thus, the iron condor feature in Optionshouse is practically useless.
As for building the IC leg by leg, I suspect (but don't know for sure) that there would be some other problems with this. For example, if I want to put the buyback order, can I do this for the entire condor or for each spread separately? The latter would be unacceptable to me. What is your experience?

1SD is 300 on NDX? For what duration? OptionHouse has no problem with any condor you'd like to build, but they may suggest a reasonable R/R rather than a 300-wide front-month condor. As in protecting the client from his own actions.