Options commission question....Tasty Works......

[Robert Morse]

In answer to Robert, FSU and srnir: I realize that IB is far from perfect. HOWEVER, would you rather have your complex order shopped to whatever MM pays the highest rebate?

I don't agree that option spreads offer the highest rebate in PFOF, but let's put that aside. I'd rather have my option order placed on an option exchange COB to allow all market makers and customers to have the ability to trade with me. That would be my preference. Price discovery is most important to me. Are you sure your IB orders are not routed to a DMM where they get PFOF?

 

[HelloDollar]

I don't agree that option spreads offer the highest rebate in PFOF, but let's put that aside. I'd rather have my option order placed on an option exchange COB to allow all market makers and customers to have the ability to trade with me. That would be my preference. Price discovery is most important to me. Are you sure your IB orders are not routed to a DMM where they get PFOF?

Unless I'm mistaken, the only payments that IB receives are liquidity rebates from Exchanges.

And, if you suspect that IB only routes your orders to exchanges paying the highest rebates, then you have the option to route wherever you want. I'm not sure that any other retail firm gives customers that same latitude.

I would guess that if a Tasty customer (or, TOS or RH etal) checked their statement, they'd notice that virtually none of their option spreads were executed on an actual Exchange.

 

[Robert Morse]

Unless I'm mistaken, the only payments that IB receives are liquidity rebates from Exchanges.

Semantics. https://www.interactivebrokers.com/en/index.php?f=563
P4. They get paid by Market Makers to route orders to them. They just use their own routes not a third party.

 

[FSU]

Spreads can be routed at IB, but it is not very intuitive.

https://www.elitetrader.com/et/threads/ibkr-smart-route-and-order-fills.328595/page-5#post-4787571

This was very helpful, thanks for the link. I thought I had remembered seeing this somewhere, but couldn't find it. What's interesting was IB said it wasn't possible to direct a spread when I called them. I wonder if they will still potentially hold the spread if you send it as a directed order.

 

[EvanDM]

Our commission rates are lower than TD but we do not have a free exit. If you always exit your trades, it might save money to pay more up front, but if your spread expires, your paid for that too. We offer $0.60/Option including the OCC fee of $0.05 without A volume commitment. We do offer a volume discounts.

Bob

What are the assignment fees at lightspeed?

 

[Robert Morse]

What are the assignment fees at lightspeed?

$15/strike.

 

[eastern_warrior]

In answer to Robert, FSU and srnir: I realize that IB is far from perfect. HOWEVER, would you rather have your complex order shopped to whatever MM pays the highest rebate?

Option spreads and multi-leg orders are the last frontier of theft for discount* firms. The juiciest rebates offered are for non-vanilla option orders. If you were Citadel, would you rather chomp on option butterflies or 100 share market orders in GE?

A spread offer at 40 cents on a "board" that's 38b-42a based on individual strikes (i.e. ATM is 1.00-1.02, OTM .38-.40) has a far better chance of being filled IB than anywhere else.

Further, as FSU certainty knows, serious* index spreaders stay away from ETFs all together and only trade CBOE listed products or options on CME futures.

I realize that due to small multipliers, SPY and QQQ are good products for under capitalized or novice traders but fill quality (and competitive commissions) are paramount to profitability. But, missing a trade because your order is hidden from the world is far more expensive than a slightly higher commission schedule.

BINGO !!!

 

[FSU]

I would guess that if a Tasty customer (or, TOS or RH etal) checked their statement, they'd notice that virtually none of their option spreads were executed on an actual Exchange.

All stock options trades that a retail customer makes on TOS, RH or Tasty are executed on a listed exchange. They may be shopped elsewhere, but they will be executed on an exchange.

This is not to say large players may make off exchange option trades, for example Goldman may enter into a specific option arrangement with a customer.

 

[Robert Morse]

executed on a listed exchange.

Correct except the are are a few option dark pools and some are based on a RFQ. Printing the trade on an option exchange is easy, but the trade was agreed to pending exchange reporting.

 

[HelloDollar]

All stock options trades that a retail customer makes on TOS, RH or Tasty are executed on a listed exchange. They may be shopped elsewhere, but they will be executed on an exchange.

This is not to say large players may make off exchange option trades, for example Goldman may enter into a specific option arrangement with a customer.

Then, why do the Rule 606 disclosures from the heavy discount brokerages show a majority of orders routed to Citadel, Virtu etal?