good discount brokerage for options?

[brian.gerson]

I have a few tens of thousands of dollars in risk capital and would like to start experimenting with (mainly US) options. My current brokerage is TD Waterhouse and they want a little over $30 for the first contract. Is there a reputable brokerage that RFDers could recommend that might charge less?

[jmc0]

I have a few tens of thousands of dollars in risk capital and would like to start experimenting with (mainly US) options. My current brokerage is TD Waterhouse and they want a little over $30 for the first contract. Is there a reputable brokerage that RFDers could recommend that might charge less?
I too am interested in finding a cheap place for large US stock and US option trades in Canada.

I wish we have flat-fee option brokerage, like they do in the USA.

Having to pay for each contract is very costly. The commission for just doing a simple trade like: cover call $10@10,000 shares for 100 contracts is very expensive, no matter which Canadian broker I go with…

itrade is $9.99+1.25/contract if you have over $50k, otherwise $19.99 + $1.75/contract

[Anonymouse]

MillionDollarJourney is recommending Questrade at the moment, possibly because they're getting a kickback.

[shawn99]

Interactive brokers has the lowest fee if you are trading stocks over a dollar, as the fee's are ridiculously low. Since it's a direct access broker, the fills are very quick. Under bundled pricing model, you are paying 0.005 x # of shares, if you are trading lots of shares, 10k, 20k+ it can add up. I pay 5 dollars to trade 1k shares under bundled pricing option. Options contracts are cheap as well, 1$/1 option contract

Most don't sign up because they can't fund 10k min to open the account. But I do have a workaround, check out my blog via twitter and you can learn how to open an account with only 5k min balance.

I also have an account with Think or Swim Canada. They have flat fee trading upto 5k shares, and you can negotiate their rates and price match with their competitors.

[g9chan]

IB has some pretty low fees but there are some hidden and not obvious costs...
- Poor execution if you compete with their market making activities
- Things like changing and canceling orders isn't free.

I've posted my experience with them here:
http://www.littleguyinvesting.com/brokers/interactive-brokers.htm

[1_black_civic]

MillionDollarJourney is recommending Questrade at the moment, possibly because they're getting a kickback.

Questrade's actually decent, I use them.

$10 + $1/contract in the currency of the trade, no minimums.

Think or Swim Canada would've been nice, except they're not accepting new applications as they've recently merged with TD. I emailed them recently and they don't have a timeline on when they will be opening up for new accounts again.

PM me if you'll be signing up for Questrade, I wouldn't mind the referral bonus if you think this information was helpful to you :)

[Anonymouse]

If I wanted to write a put on Questrade, do I have to have the amount of my exposure in the account for the duration of the contract? i.e. if I commit to buying $2k worth of stock if the person I write the put to exercises the option, do I have to have $2k in cash in the account?

[alanbrenton]

I too am interested in finding a cheap place for large US stock and US option trades in Canada.

I wish we have flat-fee option brokerage, like they do in the USA.

Having to pay for each contract is very costly. The commission for just doing a simple trade like: cover call $10@10,000 shares for 100 contracts is very expensive, no matter which Canadian broker I go with…

itrade is $9.99+1.25/contract if you have over $50k, otherwise $19.99 + $1.75/contract

Is there any brokerage that offers flat-fee option trading? Even IB costs at least $1/contract.

Doubtful this exists but am curious too. Have alreay paid so much in commissions at TDW.

[d-burn]

Questrade's actually decent, I use them.

$10 + $1/contract in the currency of the trade, no minimums.

Think or Swim Canada would've been nice, except they're not accepting new applications as they've recently merged with TD. I emailed them recently and they don't have a timeline on when they will be opening up for new accounts again.

PM me if you'll be signing up for Questrade, I wouldn't mind the referral bonus if you think this information was helpful to you :)

It's interesting to hear that you are mostly happy with Questrade. I've seen really mixed reviews. The reason I keep checking them out is because they are faaaaar cheaper for an inactive trader $5-$10 per trade vs. $19+ everywhere else.

Quick question. What are safekeeping fees. All of the online brokers seem to have this listed in their fee's. When do these apply? Is everyone paying these?

[evoviii]

If I wanted to write a put on Questrade, do I have to have the amount of my exposure in the account for the duration of the contract? i.e. if I commit to buying $2k worth of stock if the person I write the put to exercises the option, do I have to have $2k in cash in the account?

First your option level has to be set for naked option writing if you don't have the security. To qualify you need 25k US in that account.

Whether you have the cash or not in the account is not relevant, it'll just go margin if you don't have the cash and put is excercised/assigned. There's an assignment fee btw so selling puts may not be as profitable as you think if you do it low value trades.

[1_black_civic]

It's interesting to hear that you are mostly happy with Questrade. I've seen really mixed reviews. The reason I keep checking them out is because they are faaaaar cheaper for an inactive trader $5-$10 per trade vs. $19+ everywhere else.

Quick question. What are safekeeping fees. All of the online brokers seem to have this listed in their fee's. When do these apply? Is everyone paying these?

I too have read all the mixed reviews and find it puzzling. I've never had the "double order entry" syndrome or have money "magically disappear" from my account. Perhaps I've been lucky?

Safekeeping fees are not relevant to the ordinary trader. They apply when you give your stock certificates to Questrade for, you guessed it, safekeeping. Nobody actually issues stock certificates unless you ask them to (for an exorbitant fee), and you should really just stick it into your safety deposit box rather than paying Questrade custodial fees.

[alanbrenton]

Is there any brokerage that offers flat-fee option trading? Even IB costs at least $1/contract.

Doubtful this exists but am curious too. Have alreay paid so much in commissions at TDW.

:?:

[1_black_civic]

:?:

No. :)

[DrXenon]

First your option level has to be set for naked option writing if you don't have the security. To qualify you need 25k US in that account.

I don't think writing puts is considered naked option writing. The concept of naked applies when you commit to sell a security that you don't own. When I asked them in a chat window, they said all I had to have in the account was the minimum opening balance.

There's an assignment fee btw so selling puts may not be as profitable as you think if you do it low value trades.

Assignment fee on a single contract is $4.95, right? That's not too bad.

[alanbrenton]

No. :)

Thanks. I doubted a brokerage who'd charge for a flat-fee commission on options trading existed.

[evoviii]

I don't think writing puts is considered naked option writing. The concept of naked applies when you commit to sell a security that you don't own. When I asked them in a chat window, they said all I had to have in the account was the minimum opening balance.



Assignment fee on a single contract is $4.95, right? That's not too bad.

Granted writing puts is no where near as risky as writing naked calls. When you refer to minimum opening balance are you refering to the cost of purchasing securities if you get assigned or the 25k minimum balance to write naked options. Just noticed the updated their option level requirements, i'll ask them for clarification with regards to puts.

Assignments are 12.95 flat, it's under option fee schedule.

[alanbrenton]

I too am interested in finding a cheap place for large US stock and US option trades in Canada.

I wish we have flat-fee option brokerage, like they do in the USA.

Having to pay for each contract is very costly. The commission for just doing a simple trade like: cover call $10@10,000 shares for 100 contracts is very expensive, no matter which Canadian broker I go with…

itrade is $9.99+1.25/contract if you have over $50k, otherwise $19.99 + $1.75/contract

Hey jmc0, thanks for the PM. I'm quite surprised that some US brokerages do offer flat-fee option trading and that the clearing house doesn't even charge brokers per contract but a one-time trading fee. I am with TDW and just bought a few hundred contracts which cost me $500 or so on commissions.

[evoviii]

I don't think writing puts is considered naked option writing. The concept of naked applies when you commit to sell a security that you don't own. When I asked them in a chat window, they said all I had to have in the account was the minimum opening balance.



Assignment fee on a single contract is $4.95, right? That's not too bad.

I confirmed it

Subject: put option writing

Dear x,

Thank you for contacting us.

You need to have $25,000 equity in your account to qualify. From your account you qualify to make these trades. Please go to MyQuestrade > My Accounts > Update Option Level.

Please feel free to contact us if you have any additional questions.

We are available by phone 1 888 783 7866 Monday - Friday 7:30 am - 10 pm EST, by Live Chat Monday - Friday 7:30 am - 10 pm EST or email us anytime.

Please use this link to rate the response you received in this email.

Sincerely,
Hardy


So you do need 25k equity

[alanbrenton]

Which brokerage (open to Canadians) offer the best platform in terms of ease of entering a combination of option trades (spreads, collars, etc.) and closing them? I still recall that on some FX broker platforms, closing of positions was as simple as a right click of a mouse and then choosing to close the open order.

I don't think TDW's web-based Active Trader is user-friendly but I'm not sure whether the stand-along application provides ease of option order entries.

Any thoughts on this? So far, I've seen IB being mentioned a couple of times but I'm not sure if they have the most intuitive trading platform available to Canadians.

Thanks so much.

[alanbrenton]

Which brokerage (open to Canadians) offer the best platform in terms of ease of entering a combination of option trades (spreads, collars, etc.) and closing them? I still recall that on some FX broker platforms, closing of positions was as simple as a right click of a mouse and then choosing to close the open order.

I don't think TDW's web-based Active Trader is user-friendly but I'm not sure whether the stand-along application provides ease of option order entries.

Any thoughts on this? So far, I've seen IB being mentioned a couple of times but I'm not sure if they have the most intuitive trading platform available to Canadians.

Thanks so much.

:arrowu:

[alanbrenton]

Which brokerage (open to Canadians) offer the best platform in terms of ease of entering a combination of option trades (spreads, collars, etc.) and closing them? I still recall that on some FX broker platforms, closing of positions was as simple as a right click of a mouse and then choosing to close the open order.

I don't think TDW's web-based Active Trader is user-friendly but I'm not sure whether the stand-along application provides ease of option order entries.

Any thoughts on this? So far, I've seen IB being mentioned a couple of times but I'm not sure if they have the most intuitive trading platform available to Canadians.

Thanks so much.

Let's help Brian (OP, and myself) here please. :)

[alanbrenton]

I have a few tens of thousands of dollars in risk capital and would like to start experimenting with (mainly US) options. My current brokerage is TD Waterhouse and they want a little over $30 for the first contract. Is there a reputable brokerage that RFDers could recommend that might charge less?

Besides IB, any other brokerages worth checking out?