Option fills on thinkorswim vs IB

kcgoogler

kcgoogler

I was testing option fills on tos vs IB.

On friday i had an order selling a straddle in XOP in IB for 6.23 for about 15mins around 10AM. Then i routed one in tos for the same price and it got filled instantly. The IB one stayed on all day long even after i reduced the price by a penny and it never got filled.

I understand that for spreads it depends on what exchange the order got routed to etc but has anyone else experienced such a case.

Would anyone be able to conclusively say that one is better than the other?
 
On TWS, if you route complex orders by smart route , they don't go to the exchanges COB until the IB feels they are marketable. TD send their order to the exchange, but they might pass though an option dark pool first.

1245
 
Despite denials to the contrary, option fills on IB are for maximum benefit to IB, not to you.

You can see that immediately if you submit an option bid/ask inside the NBBO and see that it does not appear on the NBBO.

You will get filled when it suits IB algorithms to get you filled. I also have sat for hours with trades going off at better while my trade sat there. I had just such an instance on Friday trying to get a simple spread filled and it would not fill despite other fills going off inside mine. When you submit an option buy or sell it is on a 'by your leave' basis.

I know for a fact that OptionsXpress gives you much more efficient market access for the same trade (I've tested them in parallel) at the same time but they charge more per trade if you are trading low numbers of contracts.

On rare occasions you may get a better fill from IB, but it's extremely rare.
 
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For the most part, you are better off with DMA for option orders including complex orders. I entered an order once on TWS for a spread, got an execution two hours later,and was charge for taking liquidity. Unfortunately, IB charges more for DMA than Smart routes.

1245
 
Optionsxpress is definitely not going to lower your trading costs. Their commissions are $1.25/contract for active traders, which is .55/contract more than IB. You are basically giving away a penny per share on entry and exit, which is huge. There is no way optionsxpress is providing that much of a better fill than IB's smart route.

The best solution is direct routing at IB if you want the best fill. Unfortumately, most options exchanges dont like to share their liquidity with other exchanges, so you have no go to exchange for good options liquidity.
 
My experience with IB orders also validates what you are saying oldnemesis. I have seen IBs orders not appearing on NBBO and ofcourse not; since they are not routing it to the exchange at all. So strange.

Fine i will try routing to an exchange directly i guess. Only problem is i have to pick ICE vs CBOE (given thats where most of my orders get filled; i think). This is the yucky part; since its not free to cancel orders in ib or to change destinations either. Damn.

And currently TOS Canada has a 5$ min per leg rate minimum; otherwise i could just stick to tos (ignoring the assignment fees etc).


oldnemesis said:
Despite denials to the contrary, option fills on IB are for maximum benefit to IB, not to you.

You can see that immediately if you submit an option bid/ask inside the NBBO and see that it does not appear on the NBBO.
More...
 
Keep in mind that when you enter orders into the COB, most of the time the other party to the trade will be an option market maker that monitors all the COBs, if you use DMA to route, go to where the fees are the best.In general PHLX is $0.00 for taking and offering liquidity. I would try there first. That way your commission will be $1.00 plus reg fees a IB. With the smart route, I find I'm always being charged for taking liquidity at IB with these orders, so smart is $0.70 plus exchange and reg fees. I almost always pay more than $1.00.
 
IB charges $0.70 + random "taking liquidity" fees and possibly not actually delivering single and spread orders to any of the exchanges (when using SMART). Then you can give up a few cents to reach for a fill. Or you can pay $0.80 more (up-front) and actually have your order displayed (and filled) on one of the exchanges? Do TOS and OptionsXpress orders show up NBBO?

PS You can get $1.50/option commissions from TD ...

https://support.dough.com/hc/en-us/...e-the-commission-rates-when-trading-in-dough-
 
trader42 said:
IB charges $0.70 + random "taking liquidity" fees and possibly not actually delivering single and spread orders to any of the exchanges (when using SMART). Then you can give up a few cents to reach for a fill. Or you can pay $0.80 more (up-front) and actually have your order displayed (and filled) on one of the exchanges? Do TOS and OptionsXpress orders show up NBBO?

PS You can get $1.50/option commissions from TD ...

https://support.dough.com/hc/en-us/...e-the-commission-rates-when-trading-in-dough-
More...

Hello trader42,

yes; thats in US. In canada, its close (with TDbank & Tos) but there is a 5$min; so i need to trade in 4 lots to make commisions make sense.

And yes; in tos your order does show up on NBBO.

FWIW, now i have been trading in ib also for about 6 months; and i think the fills are ok. Its much easier to get fills on tos at mid price but its a bit harder on ib; i have to wait longer (which really means when the market moves adversely and my mid price has moved do i get a fill) or usually giveup another penny or two to get the fill. But i am fine; that is madeup by the commision being a buck lower than tos rates. Atleast i dont need to trade 4x.

That said, i currently trade with both. There are pluss-es and minus-es with both.


-gariki
 
If you are trading option spreads, you might get better execution on a platform that sends their orders to the public COB, not retains the order in an internal option dark pools. TWS retains your order in their system until they deem it executable, TD routes to the exchanges. If you want your spread order from TWS to get to the COB on the exchange, you have to choose an exchange and avoid the smart route and pay a little extra.

Your choices are limited trading from Canada.
 
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