Option Commissions: Who is the best broker?
- Thread starter Hugo Askin
- Start date
Wasn't suggesting anyone become and RIA. Was suggesting find an RIA that charges a dime plus fees and pay them their management fee. You still get TD's or IB's platform.
Price isn't everything in execution, but if your orders are small, frequent and electronic it's a pretty easy business to do. Handful here in Chicago that do it for small pools or funds,pass the dime on to you and charge you a couple of thousand bucks a year as the advisory fee.
Some do it to help make their trade quotas.
Price isn't everything in execution, but if your orders are small, frequent and electronic it's a pretty easy business to do. Handful here in Chicago that do it for small pools or funds,pass the dime on to you and charge you a couple of thousand bucks a year as the advisory fee.
Some do it to help make their trade quotas.
OK, so with quick searches I see management fees of ~1%(+) and a $4800 flat fee:
http://www.ghpia.com/process-and-fees/fee-structure/
https://www.advisoryhq.com/articles...ers-planners-and-fee-only-advisors/#Flat-Fees
http://www.basonasset.com/our-fee-structure/
with no mention of "self trading" supported.
Would you have some pointers where these deals would be advertised?
Thanks
ajacobson:
Thanks for explaining this. A couple more questions:
1) I'm assuming that the trades would still be executed using IB and cleared through IB. If this is the case - what does IB charge these RIA's for execution?
2) Why wouldn't the brokers (IB/TD) give customer accounts the same commission rates as RIA's if they are trading the same volumes?
Thanks for explaining this. A couple more questions:
1) I'm assuming that the trades would still be executed using IB and cleared through IB. If this is the case - what does IB charge these RIA's for execution?
2) Why wouldn't the brokers (IB/TD) give customer accounts the same commission rates as RIA's if they are trading the same volumes?
All the e commerce firms wholesale to the e commerce RIA community.
Why didn't they offer you that rate ?
1. You reached the wrong area in the firm.
2. Asset base too small and not enough to protect the firm or earn anything from custody.
3. The circumstances are not as you describe
4. Their history with you has led them to a decision.
Without knowing more - my guess would activity versus account size. Obviously that is conjecture on my part.
I know Schwab did it everyday as I worked at oX/Schwab. I also know our neighbor trades options even cheaper than that, but his fund is not all options and that gives them tons of assets to custody. They just gave him a trade credit for the recent outage.
Keep in mind the firm still needs to high expectation of profit from somewhere.
JPM just took a $143 million write down for concentrated margin assets going bad.
Our firm doesn't trade any with of them and we generate tons of commissions, but we use their balance sheet(s) and we trade lots of Eurex
If you can actually get to someone who does a trade cost analysis of your existing account they are going to look at a number of issues.
What you trade
Asset classes
Service required
ASSETS - ASSETS
Nobody, including an RIA will do it .
If you trading 10,000 contract a month, easily fit the platform and have a few million in non option assets you have a shot. Volume is somewhat irrelevant if you fit all the other specs.
The simple question - what size assets do you have to deposit/custody and are they US listed actively traded equities ? You don't have to answer it here, but if you are trading tons of options(You said no SPX and VIX) and doing it with a few hundred thousand dollars in the account - Forget It. You have a few $million dollars of SPY, APPL, AMZN, BAC and names like that it is a layup.
Size, well secured, diversified margin debt and also help you get a superior rate. Again they need a profit center.
Why didn't they offer you that rate ?
1. You reached the wrong area in the firm.
2. Asset base too small and not enough to protect the firm or earn anything from custody.
3. The circumstances are not as you describe
4. Their history with you has led them to a decision.
Without knowing more - my guess would activity versus account size. Obviously that is conjecture on my part.
I know Schwab did it everyday as I worked at oX/Schwab. I also know our neighbor trades options even cheaper than that, but his fund is not all options and that gives them tons of assets to custody. They just gave him a trade credit for the recent outage.
Keep in mind the firm still needs to high expectation of profit from somewhere.
JPM just took a $143 million write down for concentrated margin assets going bad.
Our firm doesn't trade any with of them and we generate tons of commissions, but we use their balance sheet(s) and we trade lots of Eurex
If you can actually get to someone who does a trade cost analysis of your existing account they are going to look at a number of issues.
What you trade
Asset classes
Service required
ASSETS - ASSETS
Nobody, including an RIA will do it .
If you trading 10,000 contract a month, easily fit the platform and have a few million in non option assets you have a shot. Volume is somewhat irrelevant if you fit all the other specs.
The simple question - what size assets do you have to deposit/custody and are they US listed actively traded equities ? You don't have to answer it here, but if you are trading tons of options(You said no SPX and VIX) and doing it with a few hundred thousand dollars in the account - Forget It. You have a few $million dollars of SPY, APPL, AMZN, BAC and names like that it is a layup.
Size, well secured, diversified margin debt and also help you get a superior rate. Again they need a profit center.
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I appreciate your information @ajacobson but how is this a realistic option for most guys here with a couple hundred thousand to invest? Should we even bother investigating RIA route?