IB options commissions

[hajimow]

Quote from Options12:

hajimow, do you cancel or not?

Good question. My cancellation fee for YTD is about $2. My YTD commission is about $6000. Here are some tricks to avoid cancellation fee.
1- Combo orders don't have cancellation fee but you don't get good commission on combo fee (you get standard fee). so you can modify combo orders as many times as you want.
2- When I put an order and then the price moves away from me and I want to change my order, I just put a new order without cancelling the first one. After the second one gets executed, and if I fear that the first one might get executed too, I cancel the first one. Otherwise I let it expire. Sometimes IB cancels my first order because I don't have margin for both orders. When IB cancels your order, you don't pay cancellation fee.

 

[hajimow]

Quote from Whistlingleaf:

hajimow to compare yourself to the original poster isn't fair since you're obviously on different rate schedules.

I have never used IB and wondering what type of volume you have to do to get your rates ?

I must be missing something cause I don't see anything published on IBs site that would allow you to get so low...

Oh and OP complaining about RAM ? time to update that 7 year old Dell ...

This is the common IB commission rate. If you set your account correctly " set it to highest rebate" even if you trade two contracts a month, you will get my rates. Most of the times for 2-3 cent options, you get paid instead of paying (rebate is more than commission.
All things said, there are many things that some traders might not like in IB. Like liquidation if you get margin call, no paper communication (everything done electronically),...

 

[TITANIMUM]

Quote from hajimow:

Most of my orders gets executed in NASDAQ as I changed my order execution setting from Smart to Highest rebate so almost 80% of my trades are executed in NASDAQ so I get 0.44 rebate for each contract. When the commission is 0.7 plus about 0.04 fee, I pay 0.74-0.44. When the commission is 0.5 because the option value is between 0.05 to 0.1, I pay about 0.54-0.44.

The trick is that I don't hit the bid when I sell or ASK when I buy. Even if I do that that might executed in BOX (I believe) that pays rebate when you remove liquidity. The worst case, I get normal commission. This way, I am saving a lot.

l checked your attachment and I have never once received such commissions in the past.
I only ever used SMART, rather than directed. What commissions do you get for index options, eg OEX, XEO, NDX, SPX, etc they are always ~ more than double the price in commissions compared to stock options
For combos, NASDAQ is not available, only for single legs.
so how do you set your order execution setting to get maximum rebate?
if you were about to sell a single leg / combo how would you do it without clicking the bid? OR buy a single leg / combo without clicking on ask?.

 

[Blazed]

hajimow,
The more attractive commissions might not make up the loss you get from a potentially inferior price on your directed exchange? did you research this beforehand?
With SMART, its suppose to choose the best price for you, though commissions are always expensive.

 

[Options12]

Quote from hajimow:

2- When I put an order and then the price moves away from me and I want to change my order, I just put a new order without cancelling the first one. After the second one gets executed, and if I fear that the first one might get executed too, I cancel the first one. Otherwise I let it expire. Sometimes IB cancels my first order because I don't have margin for both orders. When IB cancels your order, you don't pay cancellation fee.

If you don't have margin to handle both orders, the second one doesn't get entered unless you cancel the first.

If you are able to enter both orders but then go into a margin call, the IB system would likely cancel your second order as this would be the order that requires more margin.

Is this correct? I ask because I don't understand your comment here:

Sometimes IB cancels my first order because I don't have margin for both orders.

Can you explain under what circumstances this would occur?

 

[rmorse]

Quote from Blazed:

hajimow,
The more attractive commissions might not make up the loss you get from a potentially inferior price on your directed exchange? did you research this beforehand?
With SMART, its suppose to choose the best price for you, though commissions are always expensive.

He is adding liquidity and receiving rebates. So he is buying on the bid and selling on the offer. I'm not sure you can get a better price. I would not call that an inferior price. For the traders that want to spends the time to get better executions and manage their commission's, DMA works best. Smart routes might work better if you have to get an execution at that second. You can do both.

Most brokerage accounts targeting the professional trader offer both.

 

[hajimow]

Quote from Options12:

If you don't have margin to handle both orders, the second one doesn't get entered unless you cancel the first.

If you are able to enter both orders but then go into a margin call, the IB system would likely cancel your second order as this would be the order that requires more margin.

Is this correct? I ask because I don't understand your comment here:

Sometimes IB cancels my first order because I don't have margin for both orders.

Can you explain under what circumstances this would occur?

Let's say you have $5000 cash or margin to trade and you want to buy some calls at $5 per contract. You put an order to buy 8 contracts at $5 which will use $4000 of that $5000. Then you see that the bid/ask are 5.10/5.20. You are willing to buy at 5.15. Then you put a new order to buy 8 contracts at 5.15 which will be no problem but by the time that you enter your order, IB will automatically cancel your $5 order (first order) because you don't have money to trade both. Please let me I am clear now or not. I will explain it more if you are not clear.

 

[Options12]

Quote from hajimow:

Let's say you have $5000 cash or margin to trade and you want to buy some calls at $5 per contract. You put an order to buy 8 contracts at $5 which will use $4000 of that $5000. Then you see that the bid/ask are 5.10/5.20. You are willing to buy at 5.15. Then you put a new order to buy 8 contracts at 5.15 which will be no problem but by the time that you enter your order, IB will automatically cancel your $5 order (first order) because you don't have money to trade both. Please let me I am clear now or not. I will explain it more if you are not clear.

Clear, thanks. But my experience, following the scenario you describe, is that order #2 would not be allowed to be entered until you manually cancel (and pick up a cancel fee) for order #1.

Maybe there's some new methodology where IB allows you to enter the 2nd order, hold both briefly, but then cancels the first for you as you describe.

 

[hajimow]

Quote from Options12:

Clear, thanks. But my experience, following the scenario you describe, is that order #2 would not be allowed to be entered until you manually cancel (and pick up a cancel fee) for order #1.

Maybe there's some new methodology where IB allows you to enter the 2nd order, hold both briefly, but then cancels the first for you as you describe.

Great question. You are both right and not right. The case that you mentioned might happen when your first order will get executed before your second new order based on your order price. Let's say your first order is to buy an option for $5 and then you decide to lower your price to $4.8. In this case, if you want to put the second order IB will not accept it because you don't have enough margin because in case your $4.8 wants to get executed, your $5 one should have executed already. But if you increase your buying price, to $5.1, your second order will get accepted and a message will pop up on TWS that your first order to buy at $5 was cancelled because of lack of margin. To sell the option it is just the opposite. Let me know if you are now clear.

 

[hajimow]

Quote from TITANIMUM:

l checked your attachment and I have never once received such commissions in the past.
I only ever used SMART, rather than directed. What commissions do you get for index options, eg OEX, XEO, NDX, SPX, etc they are always ~ more than double the price in commissions compared to stock options
For combos, NASDAQ is not available, only for single legs.
so how do you set your order execution setting to get maximum rebate?
if you were about to sell a single leg / combo how would you do it without clicking the bid? OR buy a single leg / combo without clicking on ask?.

I only trade options for stocks. I don't trade futures. To set your account for highest rebate, click on configure, secelct smart routing and then select "highest rebate" for options strategy. Here is my today's trades so far. You see that my first order was a market order so I did not save but look at the second order which is the same option. Then look at the third order which is a combo order. Then FB which is a stock and the price does not apply for that. Look at my last trade. I am sure people would love that option commission.