IB & option contracts commissions

vladiator · Nov 13, 2002

Quote from hii a_ooiioo_a:

If your account is a margin account you should have no problem.

If it's a cash account, unless their policy has recently changed, you won't be able to buy an option priced under $1.00. But if you own an option that has fallen below $1.00 and want to sell it, you can sell it.

The disadvantage of the margin account is options are counted as daytrades if you sell the same day you bought.

Of the two, I think having the number of options you are allowed to sell the same day you buy them limited to 3 in any five day period is a harsher restriction than not being able to buy the under $1.00 priced contracts.

OK, I think I know where I misunderstood you. The 3/5 restriction you are referring will not apply if I have far in excess of 25 grand in my account, right? I hope so.
So to sum it up, if I have a lot more than 25 thousand in my account and it's a margin account, that I should be able to make as many option trades as I want as often as I want and including those in options prices below 1 buck, right?

hii a_ooiioo_a · Nov 13, 2002

Correct, with one possible exception.

Of course I'm not even sure what broker you use, so I don't know what rules they apply.

The exception is that since options are non-marginable, if you buy enough options that you are left with less than $25,000 margin equity in your account you may be subject to the daytrade restriction.

Unless you trade large amounts of options that's unlikely to happen. But it's a possibility.

vladiator · Nov 13, 2002

Quote from hii a_ooiioo_a:

Correct, with one possible exception.

Of course I'm not even sure what broker you use, so I don't know what rules they apply.

The exception is that since options are non-marginable, if you buy enough options that you are left with less than $25,000 margin equity in your account you may be subject to the daytrade restriction.

Unless you trade large amounts of options that's unlikely to happen. But it's a possibility.

Thanks for the reassuring info.

Cheezeits · Nov 13, 2002

November 12, 2002
IB Notification
US Options Cancellation Fees

Dear IB Trader:

Recently the US Options Exchanges imposed fees for the cancellation or modification of option orders. As such, IB needs to pass these fees on to our customers. Effective Wednesday, November 13th, IB will charge $1.20 for each US directed option order cancel or modification. This fee will not apply to smart routed orders. For each option order that is executed during the day, IB will provide a credit of $1.20 against the cancellation/modification fees for the day.

Interactive Brokers

aphexcoil · Nov 13, 2002

Quote from hii a_ooiioo_a:

Options in margin accounts are subject to the daytrading limitations. In cash accounts I think you can trade options without the three trade limit.

This is incorrect. Options at IB are subject to PDT with a cash account. I got stuck in the market because of this once.

hii a_ooiioo_a · Nov 13, 2002

There goes my last holdout of hope for a workable solution

stock777 · Nov 13, 2002

Haven't been doing much with options, and with this new, obscene 1.20 cancel/change fee, I will be doing ZERO.

I suggest all IB users STOP TRADING OPTIONS altogether.

hii a_ooiioo_a · Nov 13, 2002

That's their intent, isn't it, to drive us out of the options market.

The $1.20 cancel fee for direct-routed orders is not nearly as obscene as restricting us to only close three trades on the day opened within any five days. This cripples our ability to deal with options.

qdz · Nov 13, 2002

One of my friends who is still having an account with IB told me this afternoon that he feels IB is probably in some sort of financial trouble. His observations are,
1) recently no support stuff available, especially on their web sites.
2) they started to charge fee for order cancellation, which found nowhere with other brokers.
3) they increase minimum balance for commodity trading which is not under SIPC protection.

I am not sure if it is true or not. Maybe he was joking. But I feel it is good to let you know for precaution. Just in case.

hii a_ooiioo_a · Nov 13, 2002

It's worth taking into consideration. You never know.

Of course, other brokers charge so much higher fees for options commissions that they would not need to charge for cancellation fees from the exchanges. The extra fees are already included in their standard commissions.