IB TWS sucks for Options trading
- Thread starter tigerwu
- Start date
I agree. I wasn't proposing having a full-up duplication of the TOS user interface.
However there are some conveniences that could be added by a third party app for managing complex spreads.
However there are some conveniences that could be added by a third party app for managing complex spreads.
Take a look at Orc.
I'm going to assume that Timber Hill does not use TWS for its options market making, in any way.
With TWS, and the IB API infrastructure, data latency is an issue, order routing latency is an issue, and the lack of pricing tools is an issue.
Best to stick to positional spread trading through IB/TWS, and build some fancy pricing spreadsheets of your own.
No way to do anything approaching market making competitively through IB .. and that's not what IB's for imo.
I'm going to assume that Timber Hill does not use TWS for its options market making, in any way.
With TWS, and the IB API infrastructure, data latency is an issue, order routing latency is an issue, and the lack of pricing tools is an issue.
Best to stick to positional spread trading through IB/TWS, and build some fancy pricing spreadsheets of your own.
No way to do anything approaching market making competitively through IB .. and that's not what IB's for imo.
I am not a market maker, mostly just click and trade. TWS volatility trader is useless. Why would you place volatility orders when you can not even calculate the implied vols correctly. But I suspect they don't really want professional options traders to compete directly with TimberHill. It's a shame. They could have gotten a lot of commission off clients like me.
I used micro hedge more than 10 years ago. Is was pretty basic as I remembered. But at that time everything was floor based, so there was no DMA access. Do you know if they are already IB compatible? How much are they? Orc is a bit expensive at the current price. And it's too much work and too much risk to build my own front end. Is there something available around 2k a month and can plug directly into IB's current infrastructure?
I used micro hedge more than 10 years ago. Is was pretty basic as I remembered. But at that time everything was floor based, so there was no DMA access. Do you know if they are already IB compatible? How much are they? Orc is a bit expensive at the current price. And it's too much work and too much risk to build my own front end. Is there something available around 2k a month and can plug directly into IB's current infrastructure?
Have you looked at Peter Hoadley's option tools? It plugs into the IB datafeed, but does its own calcs.
http://www.hoadley.net/options/options.htm
I don't think you can trade through it, but it pretty much gives you all the info to make a trade (including delta hedging values, etc.)
Optionvue doesn't plug into IB (you have to subscribe to their own data), but has tons of functionality.
I don't have a relationship with either vendor - I have just been doing my own options platform research.
http://www.hoadley.net/options/options.htm
I don't think you can trade through it, but it pretty much gives you all the info to make a trade (including delta hedging values, etc.)
Optionvue doesn't plug into IB (you have to subscribe to their own data), but has tons of functionality.
I don't have a relationship with either vendor - I have just been doing my own options platform research.
For example:
1) If I trade any index options against futures hedge, TWS can not price options off implied cash (future-basis). So the implied vol numbers you are getting (off the underlying cash index) is not correct.
2) TWS doesn't automatically populate Interest Rate into the pricing model. I guess it's not a big deal when short term rates are around zero. But how about repo rates?
I haven't tried any of your other features because with out fixing the above mentioned problems, there's no point to go on further to portfolio management and volatility orders.
1) If I trade any index options against futures hedge, TWS can not price options off implied cash (future-basis). So the implied vol numbers you are getting (off the underlying cash index) is not correct.
2) TWS doesn't automatically populate Interest Rate into the pricing model. I guess it's not a big deal when short term rates are around zero. But how about repo rates?
I haven't tried any of your other features because with out fixing the above mentioned problems, there's no point to go on further to portfolio management and volatility orders.
Building a spreadsheet to watch the market/vol surface is fairly simple. The problem is to be able to see the quotes and fire off the orders in real time. Unfortunately I am not a real programmer, so I wont be able to build anything robust in java. The excel api provided by IB is pretty rudimentary and tends to break down very often for me. I am a price taker, so just need something simple and robust. With all the HighFreq traders around, I don't think life is so good these days for the traditional market makers unless you have a million dollar IT budget.
Guys .. I find this statement pretty chilling.
Personally I have a lot of respect for Timber Hill as a market making operation, and try to not be on the other end of their trades if I can help it.
Something about picking your battles.