IB options commissions

[IBsoft]

Quote from Options12:

Thanks for the post, IBsoft.

Does your last paragraph mean that the "Highest Rebate" preference hajimow has described does not apply to the liquidity taker rebate at BOX?

That is, if CBOE and BOX both offer the NBBO and a user has set the preference to "Highest Rebate," might the IB system route the order to CBOE instead of BOX if Timber Hill designates CBOE as the venue where IB will receive the most payment for the order?

(from the IB Payment-For-Order-Flow Disclosure / most recent 606 report)

If multiple exchanges are quoting at the NBBO for an option order and IB has discretion as to where to send the order or a portion of it, IB generally will “break the tie” by sending the order to an exchange where it will receive the most payment for the order, or to an exchange designated by the firm from whom IB will receive the most payment (typically IB’s affiliate Timber Hill LLC – see below).

As I explained, the smart routing preferences, such as "Highest Rebate", apply to liquidity providing (not taking) orders.

The smart router optimizes the routes to benefit the customer. It will not route a marketable order to CBOE, when BOX is at NBBO. Timber Hill preference will only be considered when all else is equal for the customer, e.g. the order is only marketable at AMEX and CBOE.

The language you refer to predates the maker/taker exchanges.

 

[Options12]

Quote from IBsoft:

As I explained, the smart routing preferences, such as "Highest Rebate", apply to liquidity providing (not taking) orders.

The smart router optimizes the routes to benefit the customer. It will not route a marketable order to CBOE, when BOX is at NBBO. Timber Hill preference will only be considered when all else is equal for the customer, e.g. the order is only marketable at AMEX and CBOE.

The language you refer to predates the maker/taker exchanges.

The language is from the current 606; quarter ending March 31, 2012.

Also, how and when would Timber Hill express their preference between CBOE and AMEX in that example?

 

[Options12]

Quote from IBsoft:

IB routes liquidity taking orders to BOX if (i) BOX is at the NBBO, or (ii) Timber Hill wants to provide a price improvement to the customer order. In both circumstances the customer's orders collects a rebate.

Here are some trades hajimow posted:

http://www.elitetrader.com/vb/attachment.php?s=&postid=3528673

Which case might have applied to his BOX execution: your (i) or (ii)?

Thanks.

 

[marcoPolo21]

I'm thinking of opening the PaperTrader account with IB,
just to compare options capital requirements.

I have a margin account with them, but I'm interested
in knowing how much capital is used - with short naked options VS
verticals, calendars, spreads etc

Do you think this will give me a close appoximation?

marc

 

[hajimow]

Quote from marcoPolo21:

I'm thinking of opening the PaperTrader account with IB,
just to compare options capital requirements.

I have a margin account with them, but I'm interested
in knowing how much capital is used - with short naked options VS
verticals, calendars, spreads etc

Do you think this will give me a close appoximation?

marc

All the info that you are looking for are available in IB's website. Click on the link below and the click on options and select your strategy and see the margin requirements.

http://individuals.interactivebrokers.com/en/p.php?f=margin

 

[Options12]

Quote from hajimow:

That should be the case but I guess since BOX is not that active as CBOE or NASDAQ. So when you remove liquidity, don't expect to get rebate. Leave it to the hands of luck. Basically when you set your account to highest rebate, it does not mean that your orders will go to lala land and will wait for a buyer or seller so you get the rebate. Speed and execution is also priority from your brokerage side.

It appears that on your BOX execution you received the rebate since Timber Hill decided to improve the price on 7 of your contracts.

http://www.elitetrader.com/vb/attachment.php?s=&postid=3528673

They used the sub-penny scheme to give you a partial fill at BOX.

This is fine for you, but lousy for whatever other customer held the NBBO at the time your limit order was sent.

Read comments from Bright Trading regarding sub-penny fills: http://www.sec.gov/comments/s7-02-10/s70210-63.pdf

 

[hajimow]

Quote from Options12:

It appears that on your BOX execution you received the rebate since Timber Hill decided to improve the price on 7 of your contracts.

http://www.elitetrader.com/vb/attachment.php?s=&postid=3528673

They used the sub-penny scheme to give you a partial fill at BOX.

This is fine for you, but lousy for whatever other customer held the NBBO at the time your limit order was sent.

Read comments from Bright Trading regarding sub-penny fills: http://www.sec.gov/comments/s7-02-10/s70210-63.pdf

That was a liquidation order. I over traded and I was liquidated on that position. That is perfectly fine with me. Good thing that I was liquidated with profit. This will be my last post on this thread since everything should be almost clear.

 

[IBsoft]

To my knowledge there is no such thing as "the sub-penny scheme" in the options markets. Perhaps you can explain, instead of just cutting-and-pasting interesting - yet half-relevant links.

Your numerous posts about IB suggest that no matter what IB does, you will always try to find something wrong with it. I do not wish to get into debates with you; just pointing out to the thread participants that (some?) of your posts need to be taken with a grain of salt.

I am putting you back onto my ignore list.

Quote from Options12:

It appears that on your BOX execution you received the rebate since Timber Hill decided to improve the price on 7 of your contracts.

http://www.elitetrader.com/vb/attachment.php?s=&postid=3528673

They used the sub-penny scheme to give you a partial fill at BOX.

This is fine for you, but lousy for whatever other customer held the NBBO at the time your limit order was sent.

Read comments from Bright Trading regarding sub-penny fills: http://www.sec.gov/comments/s7-02-10/s70210-63.pdf

 

[rmorse]

Quote from IBsoft:

To my knowledge there is no such thing as "the sub-penny scheme" in the options markets. Perhaps you can explain, instead of just cutting-and-pasting interesting - yet half-relevant links.

Your numerous posts about IB suggest that no matter what IB does, you will always try to find something wrong with it. I do not wish to get into debates with you; just pointing out to the thread participants that (some?) of your posts need to be taken with a grain of salt.

I am putting you back onto my ignore list.

Are you talking about the Price Improvement Period (PIP) auction?

http://www.bostonoptions.com/pip_en

 

[Options12]

Quote from IBsoft:

To my knowledge there is no such thing as "the sub-penny scheme" in the options markets. Perhaps you can explain, instead of just cutting-and-pasting interesting - yet half-relevant links.

Your numerous posts about IB suggest that no matter what IB does, you will always try to find something wrong with it. I do not wish to get into debates with you; just pointing out to the thread participants that (some?) of your posts need to be taken with a grain of salt.

I am putting you back onto my ignore list.

How did hajimow get a sub-penny execution at BOX during an automatic liquidation when he set SMART to find the "Highest Rebate?"

I never knew I was on then off your ignore list.