Thanks for clearing that up. Does IB publish its fee schedule or commission structure to explain what it takes to get down to 70 cents? They variously advertise from $1.00 to $0.75 and don't mention things like cancel/replace fees or whatever (which thinkorswim aka AMTD advertise as free.) Anyway, I'm getting a bit too far off topic, so I'll go searching for broker comparison threads. : )
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Jeff Augen's StdDev Price Change
- Thread starter dbh21
- Start date
Thanks for clearing that up. Does IB publish its fee schedule or commission structure to explain what it takes to get down to 70 cents? They variously advertise from $1.00 to $0.75 and don't mention things like cancel/replace fees or whatever (which thinkorswim aka AMTD advertise as free.) Anyway, I'm getting a bit too far off topic, so I'll go searching for broker comparison threads. : )
Quote from eh_geee@gmail:
Thanks for clearing that up. Does IB publish its fee schedule or commission structure to explain what it takes to get down to 70 cents? They variously advertise from $1.00 to $0.75 and don't mention things like cancel/replace fees or whatever (which thinkorswim aka AMTD advertise as free.) Anyway, I'm getting a bit too far off topic, so I'll go searching for broker comparison threads. : )
I don't think its off topic at all... condors are super comish sensitive obviously and playing that element right makes a big difference... yes IB does publish it. Google interactive brokers commissions.. there's a tab for options on their page... its a dollar min or .70 a contract... so condors are four contracts so the min doesn't apply... beware you'll hit Pattern day trade trigger if you exit in the same day you enter...there have been many broker comparisons that I have read and done a lot of research and tdameritrade isn't even in the ball park... although if you are a big enough player and jump through some hoops they will get rid of their ticket charge which IB doesn't have...
Agreed re. commissions.
Take the example of a small retail trader selling monthly IC's on the SPY: he sells a 2-point IC (135/133 P, 145/147 C) and collects $50, thereby risking $150 before commissions.
If he has the normal listed commissions at TOS/TD Ameritrade, he is paying 9.95 plus .75 per contract for a grand total of $12.95 in commissions which drops the actual credit to $37.05. That's a 26% haircut off of the original $50 credit.
Larger lot sizes will reduce the commission on a percentage basis but it still takes a sizable chunk out the credit received and shifts the risk/reward ratio considerably.
Take the example of a small retail trader selling monthly IC's on the SPY: he sells a 2-point IC (135/133 P, 145/147 C) and collects $50, thereby risking $150 before commissions.
If he has the normal listed commissions at TOS/TD Ameritrade, he is paying 9.95 plus .75 per contract for a grand total of $12.95 in commissions which drops the actual credit to $37.05. That's a 26% haircut off of the original $50 credit.
Larger lot sizes will reduce the commission on a percentage basis but it still takes a sizable chunk out the credit received and shifts the risk/reward ratio considerably.
Quote from cdcaveman:
I don't think its off topic at all... condors are super comish sensitive obviously and playing that element right makes a big difference... yes IB does publish it. Google interactive brokers commissions.. there's a tab for options on their page... its a dollar min or .70 a contract... so condors are four contracts so the min doesn't apply... beware you'll hit Pattern day trade trigger if you exit in the same day you enter...there have been many broker comparisons that I have read and done a lot of research and tdameritrade isn't even in the ball park... although if you are a big enough player and jump through some hoops they will get rid of their ticket charge which IB doesn't have...
Most here pay less than $2/contract on flies/condors. When the average NBBO is $60-wide, who's thinking about commissions?
Quote from BetterBeta:
Agreed re. commissions.
Take the example of a small retail trader selling monthly IC's on the SPY: he sells a 2-point IC (135/133 P, 145/147 C) and collects $50, thereby risking $150 before commissions.
If he has the normal listed commissions at TOS/TD Ameritrade, he is paying 9.95 plus .75 per contract for a grand total of $12.95 in commissions which drops the actual credit to $37.05. That's a 26% haircut off of the original $50 credit.
Larger lot sizes will reduce the commission on a percentage basis but it still takes a sizable chunk out the credit received and shifts the risk/reward ratio considerably.
spy spx is a great example of how to take advantage of a higher notional to reduce commission exposure.. i have looked up alot of stuff about the difference between the bid/ask spread of spy verse spx and never really got a straight answer.. i've heard some people complain about fills in the spx, other people say spy has great liquidity.. but i don't know myself.....
the only way to truly tell would be to put two positions on... because how would you know the fill unless you actually got it?
but if your doing alot of adjustments like this person..
http://www.traders.com/index.php/sa...real-world/1365-the-queen-of-the-iron-condors
then being with the right broker and managing your commission costs is huge..
Quote from atticus:
Most here pay less than $2/contract on flies/condors. When the average NBBO is $60-wide, who's thinking about commissions?
so your inferring your experience is that spx options spread are to costly to make sense of? it takes 10 flys/condors to make one spx .. for me thats 3.70 a shot.. does the liquidity of the spy make sense of paying 37 dollars on ten flys instead of 3.70 on one spx fly?
these guys on this thread are eluding to paying alot more then that..
Quote from cdcaveman:
so your inferring your experience is that spx options spread are to costly to make sense of? it takes 10 flys/condors to make one spx .. for me thats 3.70 a shot.. does the liquidity of the spy make sense of paying 37 dollars on ten flys instead of 3.70 on one spx fly?
these guys on this thread are eluding to paying alot more then that..
No inference there. I would rather trade a cash-settled instrument (SPX).
Quote from cdcaveman:
spy spx is a great example of how to take advantage of a higher notional to reduce commission exposure.. i have looked up alot of stuff about the difference between the bid/ask spread of spy verse spx and never really got a straight answer.. i've heard some people complain about fills in the spx, other people say spy has great liquidity.. but i don't know myself.....
the only way to truly tell would be to put two positions on... because how would you know the fill unless you actually got it?
but if your doing alot of adjustments like this person..
http://www.traders.com/index.php/sa...real-world/1365-the-queen-of-the-iron-condors
then being with the right broker and managing your commission costs is huge..
For grins, I tested this strategy with my backtesting tool. With no adjustments at all, and no stop loss, but either an exit at 75% of the credit OR expiration less than 3 weeks away, my system found 34 trades since 2006 and only 4 were losers. Average expected return of 11% per trade. Lowering the credit, I can find more trades.
So a pretty good strategy if you can find the trades. Adding some manual adjustments as well probably would help a little. But even without adjustments, most of these trades did fine.
With rolling out strikes and up on spreads to receive 80% of the original credit up to three times seem pretty wild.. I wonder if there is any parameter for when in the life of this trade does it start not to make sense to continue rolling...Quote from dbh21:
For grins, I tested this strategy with my backtesting tool. With no adjustments at all, and no stop loss, but either an exit at 75% of the credit OR expiration less than 3 weeks away, my system found 34 trades since 2006 and only 4 were losers. Average expected return of 11% per trade. Lowering the credit, I can find more trades.
So a pretty good strategy if you can find the trades. Adding some manual adjustments as well probably would help a little. But even without adjustments, most of these trades did fine.
And what strike width makes more sense and why... 30 wide? .. seems more manageable with wider strikes. Once you spread the strikes enough you might as well buy way otm penny options and ratio back spread to get positive convexity especially if your in single names... it becomes more like a rolling strangle with blow out protection