If you only traded SPY options, would it make sense to go with the lowest commissions

S

shooter

Considering SPY is the most liquid and has the tightest spread, how much better can Interactive Brokers execution be compared with, say, MB Trading or eOption?

At MB Trading it looks like I can cut commission in half with a 50 contract trade in SPY. eOption even more. That being said, there is the issue of your money being safe, IB is probably the safest place for your money (excess margin and such). eOption doesn't have the greatest reviews in older elitetrader posts.

Any opinions? Again, this is specific to the SPY etf. Less liquid stocks/etf's, that's a different matter.
 
I don't trade options so my take might be innacurate but I think your account should fall under SPIC. It's great protection if you stay within the bounds of what is insured.

Quote from shooter:

Considering SPY is the most liquid and has the tightest spread, how much better can Interactive Brokers execution be compared with, say, MB Trading or eOption?

At MB Trading it looks like I can cut commission in half with a 50 contract trade in SPY. eOption even more. That being said, there is the issue of your money being safe, IB is probably the safest place for your money (excess margin and such). eOption doesn't have the greatest reviews in older elitetrader posts.

Any opinions? Again, this is specific to the SPY etf. Less liquid stocks/etf's, that's a different matter.
More...
 
Quote from just21:
Why not trade ES? Lower margin and larger contract size mean less comission.
More...
I may have misread this elsewhere but you can't be filled at ES midpoint (option spread, say a 1 point spread) unless you are crossed with a customer at IB???? ES has great commissions benefits but trying to get pricing closer to midpoint and thus execution speed (as compared to SPY) would eat away some of those benefits I would think.

If you are in a vertical spread and earning on direction, the 1 point option spread is probably a moot point, but say you are doing delta neutral stuff, hedging, etc., then I think the spread would be a bigger issue.
 
Quote from shooter:

I may have misread this elsewhere but you can't be filled at ES midpoint (option spread, say a 1 point spread) unless you are crossed with a customer at IB???? the spread would be a bigger issue.
More...

shooter I would be shocked if that were true (not an IB client)..I have found ES options/spreads very easy to trade and get mid price, so agree if you only trade SPY....go to ES. If you are naked then sometimes the margin requirements are squirrely, but if you only spread then you should be fine.
 
I do not have experience with the other brokers you mentioned, but I generally get pretty good commissions on SPY with IB using the SMART Rebate option, and I am a low volume trader. For example, yesterday I bought two SPY options for a total of 77 cents commission, and I usually do not have to pay more than 70 cents total per contract. As to how it compares to ES, I personally don't view the advantage over SPY as being as big as I initially thought it would be. The commissions with IB (for me at least) are $1.42 per ES option contract, and you can only use 25 cent increments as opposed to the minimal slippage on SPY. Obviously SPAN margin and the ability to trade around the clock come into play as well. With all that said, SPX might be worth considering and may give you the best of all worlds: the largest notional and minimal slippage.
 
RichardRimes, just curious which broker are you trading with? PM me please if you don't want to post it in the thread.

There was a guy on here who switched from IB after a lengthy discussion about orders being held by Timberhill. I don't think he was referring to ES specifically but option spreads in general. I'll try to find the thread. Don't get me wrong, I love everything so far about IB, even clunky optiontrader and spreadtrader; this is a question specifically about SPY though. IMO, considering how efficient SPY is (liquidity and spread), the efficiency of the broker (execution) would matter less, and so the most important part of the equation would be commissions. And, the chance of your broker going the way of PFG and MF Global.
 
Quote from noregrets:

I do not have experience with the other brokers you mentioned, but I generally get pretty good commissions on SPY with IB using the SMART Rebate option, and I am a low volume trader. For example, yesterday I bought two SPY options for a total of 77 cents commission, and I usually do not have to pay more than 70 cents total per contract. As to how it compares to ES, I personally don't view the advantage over SPY as being as big as I initially thought it would be. The commissions with IB (for me at least) are $1.42 per ES option contract, and you can only use 25 cent increments as opposed to the minimal slippage on SPY. Obviously SPAN margin and the ability to trade around the clock come into play as well. With all that said, SPX might be worth considering and may give you the best of all worlds: the largest notional and minimal slippage.
More...

Thanks for the post. Hate to sound like a dumbass but I didn't even know about SMART Rebate :eek: :( . Time to explore that. I have no experience with MB Trading or eOption either, I'm just going by older threads I read. eOption would seem like a nobrainer, $8.00 for 50 contracts according to their website. But you can't find that many reviews on them.
 
I didn't find it so easy to get midpoint selling mostly close the money strangles on ES with IB, even though the spreads were small. Anyone can confirm I should get filled easily at midpoint ?
 
shooter, I'm with TOS/TDameritrade...so even more onerous commission structure than IB, one of the reasons I switched to straight futures options...keeping risk the same it reduced my comm costs. As was pointed out if you do stick to spy options I don't see a great risk of any broker going broke being on you...however it never hurts to have your money spread between several brokers. I just don't like having to keep track of that but eventually I do plan to add another lower cost broker to my accounts.

to luisHK I admit I leg into my spreads...so I'm mostly buying or selling singles. Certainly it won't be as fast as spy options but I haven't really had issues
 
You must log in or register to reply here.
Back
Top