Options STOP Order at IB

T

TraderSU

Does IB's cancel/modify fee apply when you modify options STOP orders? STOP order stays with broker and does not hit exchange unless it is triggered so I'm hoping that answer is NO. Has anyone experienced it?

Also BID/ASK spreads are usually too wide at around open or close so my loss will be bigger if my STOP get kicked during one of those periods. When kicked it'll become MARKET ORDER and execute at it's extreme end :-(

How do you guys manage an open options position?

- SU
 
There is no fee if you cancel or modify a STOP order before it triggers.

There is no fee if you cancel a SMART routed option spread order, or modify it, or at least I have never experienced one.

There can be a fee if you cancel a buy or sell order to buy or sell options that are not combo orders. I have experienced those from time to time.

IMO it is best to have some protection in any of your positions in the form of OTM options to mitigate your losses in a fast market. I like to allocate around 10% of the net margin on a credit spread for "protection," especially if you have to be away from your trading system for a long part of the day.
 
Quote from SteveGoTex:

There is no fee if you cancel or modify a STOP order before it triggers.

You cannot cancel it after it triggers?


There is no fee if you cancel a SMART routed option spread order, or modify it, or at least I have never experienced one.

You are lucky. When I change the limit price for a spread, IB sucks the fee right out of my account.
More...

Mark
 
"You cannot cancel it after it triggers?"

I would assume you could try to cancel any STOP order after it triggers, before it executes. On a normal STOP order, you would not have much time, if any. On a STOP LIMIT order, which I have never done, you might actually have the time to cancel it depending on your limit.

Perhaps I misunderstood your question. Were you trying to get at something else?


"You are lucky. When I change the limit price for a spread, IB sucks the fee right out of my account."

I checked my 2009 trades. Cancellation fees amounted to 1.1% of total commissions in my account for the year. None of those cancellation fees occurred on spread trades. It could be just luck on my part. I don't know, but that is my experience.
 
Am I mistaking in saying that STOP order stays with broker until it is triggered, and becomes MARKET order when trigerred. If that is true, why the hell IB charges fee.

We can have TWS alarm based stop order but that won't work if disconnected.

So all IB users, how do you manage your open options positions?
 
IB DOES NOT CHARGE A FEE FOR CANCELING A STOP ORDER.

It is not resting on the exchange, it is at the broker. I tried to say that above, but perhaps it was not clear.

THE ALARM WILL WORK IF YOU ARE NOT CONNECTED.

I asked IB about that two years ago and they confirmed it to me. You can have their servers send you an email or text message when an alarm triggers.

I manage my open option positions by watching them like a mother hen.


Quote from TraderSU:

Am I mistaking in saying that STOP order stays with broker until it is triggered, and becomes MARKET order when trigerred. If that is true, why the hell IB charges fee.

We can have TWS alarm based stop order but that won't work if disconnected.

So all IB users, how do you manage your open options positions?
More...
 
Quote from TraderSU:

Am I mistaking in saying that STOP order stays with broker until it is triggered, and becomes MARKET order when trigerred. If that is true, why the hell IB charges fee.
More...

I believe you are thinking of a trailing stop. that should stay with the broker until triggered and then sent out as a market order. a regular stop order should get sent out to the market when placed.
 
Quote from SteveGoTex:

There is no fee if you cancel or modify a STOP order before it triggers.

There is no fee if you cancel a SMART routed option spread order, or modify it, or at least I have never experienced one.

There can be a fee if you cancel a buy or sell order to buy or sell options that are not combo orders. I have experienced those from time to time.
More...

Just last week I asked IB about change/cancellation fees on option orders and received the following information in writing from them:

If you move or cancel a stop order, there is a fee.

If you have a limit order in place for an option position and cancel it before it fills, there is a cancellation fee.
 
My apologies. Looks like I was wrong about the fees on option stop orders.

When I saw the responses on this thread I went back and looked at what I actually did.

Instead of a STOP order on an option trade, I actually set an ALARM on the underlying price, and then had the alarm place a market order on the option. This was generally to buy back a short option position.

I had successfully canceled these ALARMS and their associated contingent orders with no cancellation fees. I do know for a fact that these ALARMS will trigger and execute their contingent orders during trading hours, whether or not you are logged in on TWS. I know this because I had it happen.

So that is what I did instead of placing a STOP order on the option itself.

I use STOP orders on stocks, and there is no penalty for cancelling those, based on my experience.

So, perhaps using ALARMS with contingent orders would be a way to have the effect of a STOP without the associated cancellation fee if you wanted to cancel it.

Again, sorry for the bad info.
 
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