SPX Credit Spread Trader

I'm actively demoing IB right now. I can say for certain their web trader platform sucks, and their mobile trader only allows you to view positions.
Their TWS platform is another story, it's huge and complex. unfortunately they only have the OEX demo symbol and option chain for CBOE options, so that's what I'm demoing now. You can't enter spread orders from the chain like tos and ox, you can view the chain and then you have to create a "combo" order. Once that order ticket is created, you can view the bid/ask of the spread. Their spread SMART routing system looks cool, they will leg you in and take the risk on their side to get you the best fill. Not sure if this matters with CBOE only contracts. Their analysis tools match up to OX at least. Their P/L is much better, and the biggest win to me is it's a universal account. I can trade futures, options on futures, forex, options, etc... This is huge to me.

From the commission stand point, I paid about 2.2K in commish last year with OX at 1.25/contract. If I would have went with IB, I would have saved over $850 for the year. Not chump change, but I don't drive a Kia either, the lowest price doesn't always win.

Downside is if you work at a company that doesn't allow the ports IB uses open, your screwed. No TWS for you. I believe this is the same with TOS.

If anyone has actively used IB to trade credit spreads, I'd love to hear your opinion.

sd


Quote from optioncoach:

The customer service and past problems I have had with IB are the only reasons I will not go back to IB. Also, it is still a pain to simply view the entire chain with one simple click with all b/a and IV data. Lots of people are happy with IB but the new lower commissions still not enough to make me switch lol.
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Isn't this exactly what OptionsXpress's XSPREADS orderbook marketplace is? A internal market to OX that allows users to see what other's are buying or selling? I can take the other side of any spread trade on XSPREADS by looking at their order book.

https://www.optionsxpress.com/welcome/tour/xspreads.aspx?sessionid=&nav=quick

Quote from Sailing:

Coach or others....

Is there a possibility of "trading" contracts, as opposed to buying and selling them. I'll go out on the limb here and suggest... could we create an "OptionEbay" service. This would essentially erase the b/a spread and trade options for their 'value'.

Murray
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It might be that but the problems I listed are still gonna exist. If you are looking to sell a spread and you see someone looking to buy the same spread, they are gonna want to pay as little as possible and you are gonna want to sell it for as much as possible. So unless you are willing to accept their price you cannot alter it. I often see an XSPREADS order pop up but the price always sucks for me to take the other side lol.


Quote from skdoyle1:

Isn't this exactly what OptionsXpress's XSPREADS orderbook marketplace is? A internal market to OX that allows users to see what other's are buying or selling? I can take the other side of any spread trade on XSPREADS by looking at their order book.

https://www.optionsxpress.com/welcome/tour/xspreads.aspx?sessionid=&nav=quick
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Oh, where to start....at Starbucks on PDA - mini-keyboard will make my response briefer than normal...

ToS allegedly will attempt to cross-match customer orders before routing elsewhere. If you can find an opposing order on thinkspreads then you might be in luck.

The thing to bear in mind is, in theory, the larger the delta of the spread the larger the instantaneous risk the MM takes on and hence the wider the b/a of the spread is likely to be. MMs are obliged to make a market for your order regardless of whether there is demand for the other side. The higher the volume, the narrower the spread will likely be which is why liquidity is important to look at when choosing strikes. Multiple listing etc. all help this.

As MMs make the bulk of their money from buying on the bid and selling on the ask, if a bunch of you get together to increase the size of an order you will probably get a better fill. MMs like size. So do the ladies.

Lastly, I believe the rules are such that MMs maintain the monopoly on making markets which would preclude any kind of optionEbay in theory though it is conceivable that ToS could extend thinkspreads to allow for this kind of feature...if folks were happy with partial fills and "legging in" risk.

Certainly you could do this manually. If two of you had overlapping spreads where one was long one leg that the other wanted to be short that strike, then if both spread orders were entered as singles where the common leg was limit right at the mid, they should get matched up by ToS thus cutting out the MM.

I'm rambling so I'll leave it there...

MoMoney.



Quote from Sailing:

Coach or others....

... an interesting thought...

Many times... someone on this board is selling or buying a contract, which others are selling or buying on the other side... and the MMs are making out like bandits.

For Example: someone bought a Jan 1200p for $1.20, and the best price I could get sell a Jan1200p on the same day within the same time frame for .70 ....the MMs are getting rich!

Here's my thought!

Is there a possibility of "trading" contracts, as opposed to buying and selling them. I'll go out on the limb here and suggest... could we create an "OptionEbay" service. This would essentially erase the b/a spread and trade options for their 'value'.

Your thoughts appreciated.

Murray
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Things to throw into the mix when comparing execution costs:

Ticket charges per spread vs. contracts.

Cancel/replace charges for orders. Read that small print.

Ability to split your spread order across exchanges to get NBBO on all legs.

Negotiability e.g. I've lost count of the number of different commision schedules I've seen for ToS. If you don't ask, you don't get. Competition is fierce - volume will win.

MoMoney

Quote from skdoyle1:

I'm actively demoing IB right now. I can say for certain their web trader platform sucks, and their mobile trader only allows you to view positions.
Their TWS platform is another story, it's huge and complex. unfortunately they only have the OEX demo symbol and option chain for CBOE options, so that's what I'm demoing now. You can't enter spread orders from the chain like tos and ox, you can view the chain and then you have to create a "combo" order. Once that order ticket is created, you can view the bid/ask of the spread. Their spread SMART routing system looks cool, they will leg you in and take the risk on their side to get you the best fill. Not sure if this matters with CBOE only contracts. Their analysis tools match up to OX at least. Their P/L is much better, and the biggest win to me is it's a universal account. I can trade futures, options on futures, forex, options, etc... This is huge to me.

From the commission stand point, I paid about 2.2K in commish last year with OX at 1.25/contract. If I would have went with IB, I would have saved over $850 for the year. Not chump change, but I don't drive a Kia either, the lowest price doesn't always win.

Downside is if you work at a company that doesn't allow the ports IB uses open, your screwed. No TWS for you. I believe this is the same with TOS.

If anyone has actively used IB to trade credit spreads, I'd love to hear your opinion.

sd
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I agree. I think XSpreads is basically a waste of time, but the concept he's talking about exists on OX and TOS.
Quote from optioncoach:

It might be that but the problems I listed are still gonna exist. If you are looking to sell a spread and you see someone looking to buy the same spread, they are gonna want to pay as little as possible and you are gonna want to sell it for as much as possible. So unless you are willing to accept their price you cannot alter it. I often see an XSPREADS order pop up but the price always sucks for me to take the other side lol.
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Can you define what you mean by Ticket Charges?

IB's commish schedule is hard to understand. And yes, they do have cancel/replace charges.

PS: I asked TOS to meet IB's sched, and they would only do 1.25 at the lowest. Scott said they are not competing with them.

Quote from momoneythansens:

Things to throw into the mix when comparing execution costs:

Ticket charges per spread vs. contracts.

Cancel/replace charges for orders. Read that small print.

Ability to split your spread order across exchanges to get NBBO on all legs.

Negotiability e.g. I've lost count of the number of different commision schedules I've seen for ToS. If you don't ask, you don't get. Competition is fierce - volume will win.

MoMoney
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The cancel and replace charges alone would probably kill me if I went to IB. I'm constantly cancelling and replacing trying to get the best fill. Worked well up until recently. Now I'm having trouble getting filled at all.

Quote from skdoyle1:

Can you define what you mean by Ticket Charges?

IB's commish schedule is hard to understand. And yes, they do have cancel/replace charges.

PS: I asked TOS to meet IB's sched, and they would only do 1.25 at the lowest. Scott said they are not competing with them.
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Rdemyan,
I hear you. I'm not sure where a fill will occur anymore .... it certainly is NOT at anywhere near the midpoint.

Quote from rdemyan:

The cancel and replace charges alone would probably kill me if I went to IB. I'm constantly cancelling and replacing trying to get the best fill. Worked well up until recently. Now I'm having trouble getting filled at all.
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I have ruined it for all spread traders lol..... actually I think with increasing vol (statistical that is), MMs are widening the spreads and less likely to give in near the mid point...

Quote from Synaptic:

Rdemyan,
I hear you. I'm not sure where a fill will occur anymore .... it certainly is NOT at anywhere near the midpoint.
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