Option Commissions: Who is the best broker?

[Robert Morse]

How are you able to move 500 contracts a day/or at a Time in One order.

This depends on the symbol. I have clients that trade larger lots that that without a problem. SPY, QQQ, AAPL..no problem. When I was a market maker, just our crowd on the AMEX in AAPL was 2000 to 5000 up with 30 traders. Now add 14 other exchanges. When I left in 2010, the QQQ crowd was 20,000 up. OTM options more, ITM options less. I assume you can get that today too.

 

[sle]

When I left in 2010, the QQQ crowd was 20,000 up. OTM options more, ITM options less. I assume you can get that today too.

I'd say liquidity gotten more polarized. The liquid stuff is even more liquid - I traded 20k AAPL straddles over a few min recently, electronically, used to be that you had to quote dealer if you wanted that size. The illiquid stuff is even more illiquid - biotech and event names gotten really bad and you might be lucky to get a contract done.

 

[ajacobson]

Typical retail for 500 contracts would be 25 opening and 25 closing - without knowing more.

At IB where typical size is small it all changes.

No SPX and no VIX this can be done really cheap. Probably $.15 all in before any rebating.

 

[sle]

How are you able to move 500 contracts a day/or at a Time in One order...without making the Bid/Ask price spreads have slightly explosive diarrhea?

There is an art and a science to it, too detailed to discuss here.

Anyways, I hope to get that large one day. Where I become a small, mini whale making fart tidal waves with each order batch. -- It's just a matter of skill and compounding, right

At some point you get to actually make up your own reality. For example, there used to be a guy that would quote multiple dealers on a fairly illiquid name. Usually, he was a seller of slight OTM puts and he'd hit 4-5 guys at once. Of course, once everyone was choking on that gamma, vol (both implied and realized) would die. Self-fullfilling prophecy. People called him "The Put Bomber".

 

[Hugo Askin]

Thanks to everyone with all the replies. Many of them were useful - (the website that calcs commissions, negotiating fees etc)

Not sure what the regulatory hurdles are to be an RIA - but it seems very strange that you have to be one to negotiate fees at some firms. Will take the next couple of months and make a decision re where to go.

wrt to volume/liquidity question. Some months I do 3,000 contracts - others 30,000. Depends on the what is out there. I spent over 125K in commissions last year. No issue with liquidity for me. Yes - sometimes a 20 lot can move the vol +/- and then the game is over for me but other times I can do 3,000 contracts at the exact same vol. It can be frustrating but that is the marketplace.

 

[Robert Morse]

Thanks to everyone with all the replies. Many of them were useful - (the website that calcs commissions, negotiating fees etc)

Not sure what the regulatory hurdles are to be an RIA - but it seems very strange that you have to be one to negotiate fees at some firms. Will take the next couple of months and make a decision re where to go.

wrt to volume/liquidity question. Some months I do 3,000 contracts - others 30,000. Depends on the what is out there. I spent over 125K in commissions last year. No issue with liquidity for me. Yes - sometimes a 20 lot can move the vol +/- and then the game is over for me but other times I can do 3,000 contracts at the exact same vol. It can be frustrating but that is the marketplace.

I expect you would benefit from our platforms, rates and customer service. Up to you if you email or call.

 

[stockmarketbeginner]

I just joined Elitetrader and was wondering if anyone had any advice on what broker I should use. I have been using TD Ameritrade and have been paying way too much in option commissions. I trade quite a bit - about 10,000 contracts a month. About 500 trades of 20 lots each month. A friend recommended IB but the rates are not much cheaper. This is what I have found:

500 trades of 20 contracts per month:

EOption: $3500
Lightspeed: $4650
Interactive Brokers: $7415
Etrade: $7475
Tradestation: $7500
TD Ameritrade: $10,975 (But I could get that down to about $7000 via negotiation)

I have included the OCC fee (.04-.05)

My buddy suggested that IB would be the cheapest. I believe he is wrong as they seem to be decent but nothing great wrt cost. Am I missing anything?

Also, any thoughts on EOption or Lightspeed? (or any other decent brokers with good rates?)

Does anyone know what brokers will negotiate rates? (IB??)

I just joined Elitetrader and was wondering if anyone had any advice on what broker I should use. I have been using TD Ameritrade and have been paying way too much in option commissions. I trade quite a bit - about 10,000 contracts a month. About 500 trades of 20 lots each month. A friend recommended IB but the rates are not much cheaper. This is what I have found:

500 trades of 20 contracts per month:

EOption: $3500
Lightspeed: $4650
Interactive Brokers: $7415
Etrade: $7475
Tradestation: $7500
TD Ameritrade: $10,975 (But I could get that down to about $7000 via negotiation)

I have included the OCC fee (.04-.05)

My buddy suggested that IB would be the cheapest. I believe he is wrong as they seem to be decent but nothing great wrt cost. Am I missing anything?

Also, any thoughts on EOption or Lightspeed? (or any other decent brokers with good rates?)

Does anyone know what brokers will negotiate rates? (IB??)

Since you do so much trading, some related things to think about:
Try out the interface to see if it looks nice and you like the features.
Find out about quality of order execution. Experienced traders here talk about obscure things like how many ticks it takes before an order gets completed, and things like ARCA routing.
Phone support also counts, IMHO.

 

[trader42]

IB and TD will go to $.10 a contract plus exchange, ORF and OCC fees for their RIA clients where they get to custody the securities. Many of the RIAs will simply charge you a few thousand a year as a management fee. Schwab will go to $.00 plus exchange, ORF and OCC where there is $5 million to custody. Obviously the money is being made on stock rebate as well as the maker/taker, PFOF and liquidity rebates. They just don't want tons of SPX and VIX.
If you trade that size don't talk to the retail help desk - talk to the professional/RIA folks.

Will the RIA folks work with non-professionals (having the desired account size or trade volume)?

 

[trader42]

I just discovered them so I have not thoroughly investigated them yet. RH is certainly not the only broker to use PFOF. That is what "Smart" and "Intelligent" order routing at IB and TS also do is it not?

Read the broker disclosures carefully. "Smart" orders are likely partially PFOF driven, and I wouldn't be surprised if DMA orders would fall under PFOF too ...

 

[FSU]

My advice to you would be going with an smaller introducing broker such as Lightspeed or Eroom Securities (this is where I currently trade). Lightspeed will introduce to Wedbush, Eroom introduces to Apex and Merrill.

Dealing with these types of firms will get you excellent customer service along with good pricing.

Your next decision is what execution platform you use. Some will be free, others will cost monthly fees. This is important as it will help you control where and how your orders are sent and how much you will be able to receive in rebates. Its very possible depending on what types of orders you trade you will have a net rebate exceeding your commission costs.