IB's option cancellation fee

[Epic]

Quote from rmorse:

I'd be happy to discuss this with you privately. To be clear. I have no issue with IB. We are Introducing Brokers to IB. I've never "bashed" them and have incredible respect for the person that started the firm, and he was an AMEX member like myself around the same time.

I have my own opinion about the firm that I'm entitled to based on my knowledge and interaction with both IB and Timberhill, which by the way used to lease one of my Amex memberships. My opinion is that although IB is a great place for many traders, it was created to provide order flow to Timberhill at better rates that it could go out and buy in the street. If clients benefit from that, that great. Other trading operations have done the same thing.

No one firm is best for everyone. When a traders says in a forum, "I'm looking for an alternative", I'm interested in finding out if there is a good fit for us. Not everyone is right for us either.

Not trying to say that IB is perfect. There are things about them that I hate. Their phone service might be the worst in the industry. And their professional client allocation profiles needs some serious help despite numerous promises to fix it, and it is almost enough to cause me to leave them. I'm just saying that the points that you bring up are either untrue or irrelevant.

Also, let's assume that you are correct in that IB was created to provide order flow to TH. Under what circumstances is this a negative for IB customers? Personally, I don't care who is on the other side of my trades. If I get the fills that I want, and they can make money too, more power to them.

 

[rmorse]

Quote from Epic:

Not trying to say that IB is perfect. There are things about them that I hate. Their phone service might be the worst in the industry. And their professional client allocation profiles needs some serious help despite numerous promises to fix it, and it is almost enough to cause me to leave them. I'm just saying that the points that you bring up are either untrue or irrelevant.

Also, let's assume that you are correct in that IB was created to provide order flow to TH. Under what circumstances is this a negative for IB customers? Personally, I don't care who is on the other side of my trades. If I get the fills that I want, and they can make money too, more power to them.

It's not a negative. Every DMA route sells their flow. Just a fact. I don't care who is on the other side of my trades either, but some traders do. Def likes to speak for me, and tell me what I'm thinking. He makes a lot of assumption, and he has never met or spoken to me. He represents his firm and his opinion and I'll represent mine. Our services are different and so is our target market. I think IB has been very good for the industry that I love and have been involved in since 1980.

I'm here in this forum to help traders with their questions and meet possible clients. I've spoke on the phone with many traders that I know will never be clients, because I can help them. I enjoy the interaction.

To my knowledge, I've NEVER said anything untrue. I try to check my facts first. It is possible from time to time I make a mistake. It's not ment to be misleading.

 

[Epic]

Quote from rmorse:

It's not a negative. Every DMA route sells their flow. Just a fact. I don't care who is on the other side of my trades either, but some traders do. Def likes to speak for me, and tell me what I'm thinking. He makes a lot of assumption, and he has never met or spoken to me. He represents his firm and his opinion and I'll represent mine. Our services are different and so is our target market. I think IB has been very good for the industry that I love and have been involved in since 1980.

I'm here in this forum to help traders with their questions and meet possible clients. I've spoke on the phone with many traders that I know will never be clients, because I can help them. I enjoy the interaction.

To my knowledge, I've NEVER said anything untrue. I try to check my facts first. It is possible from time to time I make a mistake. It's not ment to be misleading.

Well, I appreciate your opinion and the assistance you give traders. If you want to be able to make the claim "I've NEVER said anything untrue." then I would encourage you to exercise a bit more caution. You specifically implied that their relationship with TH comes at the expense of their clients. you even demanded that DEF come clean. And you did make the statement that IB exceeds cancellation limits because of in-house trading.

Not exactly fair to imply that you aren't competing for the same clients either. There is heavy overlap in target market for you and IB. It's understandable that you want to point out differences and present yourself in the best possible light.

 

[Options12]

Quote from Epic:

I personally won't use a broker that doesn't have some sort of auto-liquidation policy. I only utilize about 5-10% available margin and I'm never in danger of triggering auto-liquidation for myself or my clients.

Epic, IB aside, what other brokers do you use that employ auto-liquidation algos to correct intra-day margin calls to protect their clients?

 

[Options12]

Quote from Epic:

IB does not have a prop trading desk. They do have a sister company market maker, but you should know that it isn't close to the same thing.

The IB brokerage subsidiaries may not engage in proprietary trading, but IB will confirm that other subsidiaries certainly do.

From:http://www.interactivebrokers.com/en/general/about/about.php

In its proprietary trading business, IB engages in market making for its own account in about 6,500 different electronically traded products.

IB's "sister" companies:

 

[babutime]

Quote from TskTsk:



Order entry is another thing. If I'm entering 7-8 positions at once, I don't have time to babysit each order making sure it's always where I want it. Why can't I automatically track the midpoint? I'm aware I could use "combo entry", but that only allows 4 legs max, another limitation.

[...]

No more unwanted directional exposure while waiting for a position to fill; just send an order for an underlying hedge if price crosses customized barriers. And you can't beat Excel at graphs. It's absolutely beautiful. For data analysis as well. The best thing would probably be C# or C++ but I'm not quite ready for that yet.

You bring up excellent points about its charts. They're not what I've hoped they'd be but I'm fine with it. I use TOS for live charts sometimes.

As for multi leg orders (I'm usually only trading flys, verticals), they're quite simple to trade. I haven't really tried anything crazy beyond those as I'm not aware of any options combos with more than 4 legs. What kinds of combinations are you trading?

I'll be delving into some Java development soon.

I'd have liked a Matlab API but they dont seem to be very good. As for Excel, mine always seems to hang with a DDE connection.

Did you do your own development TskTsk ? My main focus is calculating second order greeks and term structures of IV n "shit like that".

Any helpful links you could point to as well?

 

[Epic]

Quote from Options12:

Epic, IB aside, what other brokers do you use that employ auto-liquidation algos to correct intra-day margin calls to protect their clients?

Well, most big brokers reserve the right to liquidate securities to meet margin requirements at will. They almost always include a clause in the contract that says they don't even need to contact you to do it.

Most give far too much leeway intraday in my opinion. A lot can happen in a day. Many even give people up to three days to wire funds. That is completely unacceptable to me. I'm fine if the account is still liquid and is simply not meeting maintenance margin requirements, but if there is a threat at all of the account going negative, every decent firm should have auto liquidation in place.

FWIW, I did have a small $30,000 account at IB that I used for redundancy/hedging a few years back that fell below maintenance margin limits. IB did not auto liquidate but sent a message that they would liquidate if I didn't bring up the level. I've also gotten a couple errant robo emails from IB over the years claiming that my account was subject to margin call due to a weird computer glitch. Nothing was auto liquidated in any of those cases either. So I think the issue might be a bit overblown.

 

[TskTsk]

Quote from babutime:

You bring up excellent points about its charts. They're not what I've hoped they'd be but I'm fine with it. I use TOS for live charts sometimes.

As for multi leg orders (I'm usually only trading flys, verticals), they're quite simple to trade. I haven't really tried anything crazy beyond those as I'm not aware of any options combos with more than 4 legs. What kinds of combinations are you trading?

I'll be delving into some Java development soon.

I'd have liked a Matlab API but they dont seem to be very good. As for Excel, mine always seems to hang with a DDE connection.

Did you do your own development TskTsk ? My main focus is calculating second order greeks and term structures of IV n "shit like that".

Any helpful links you could point to as well?

To be honest, I don't really have any names for what I'm trading. All kind of stuff really, where I try my best to isolate some greek and profit of it.

I do my own development yes, I make active use of VBA in excel. I've learned a lot of VBA since I started it, and I heard C# is similar so that's why I'm considering changing to that soon. I do have an extended model setup in Excel which allows to see higher-order greeks, risk graphs etc. My main reason for using Excel is PnL attribution work and automation of position adjustments like delta hedging. I use it also for easing the pain of putting on positions with more than 4 strikes as described previously.

Not sure if I my links will be of use to you....depends what you're looking for really. I have a higher-order spreadsheet here: http://www.elitetrader.com/vb/attachment.php?s=&postid=3452907 Other than that, not much. Not sure how you can resolve the DDE hang issue...

 

[babutime]

Quote from TskTsk:

To be honest, I don't really have any names for what I'm trading. All kind of stuff really, where I try my best to isolate some greek and profit of it.

I do my own development yes, I make active use of VBA in excel. I've learned a lot of VBA since I started it, and I heard C# is similar so that's why I'm considering changing to that soon. I do have an extended model setup in Excel which allows to see higher-order greeks, risk graphs etc. My main reason for using Excel is PnL attribution work and automation of position adjustments like delta hedging. I use it also for easing the pain of putting on positions with more than 4 strikes as described previously.

Not sure if I my links will be of use to you....depends what you're looking for really. I have a higher-order spreadsheet here: http://www.elitetrader.com/vb/attachment.php?s=&postid=3452907 Other than that, not much. Not sure how you can resolve the DDE hang issue...

Thanks for that spreadsheet!

Yeah C# is definitely nice but unless you're gonna do some full-fledged marketable product, I'd stick with VB. I've used C# a while back at a software company I worked at. Mostly database stuff. I didn't like it THAT much- partly cuz it's half assed.

VB is simple and nice and easy to learn and work with. C++ is the big daddy but you (probably) won't need that either. In between the two lies C#.

If your goal is something insane- Visual C++ or even Java- plenty of libraries for just about anything financial. If it is something simple, I'd stick to VB.

... apologies to the OP. We have seriously gone off on tangents.

 

[Options12]

Quote from Epic:

I've also gotten a couple errant robo emails from IB over the years claiming that my account was subject to margin call due to a weird computer glitch. Nothing was auto liquidated in any of those cases either. So I think the issue might be a bit overblown.

You received notices of margin calls despite only using 5 - 10% of margin? Portfolio Margin or Reg T?

I think IB might be the only broker that uses software to auto-liquidate intra-day due to an intra-day margin call. If you know of others, please let me know.

Thanks.