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Option Friendly Brokers
August 4th, 2009 
Genius Not all brokers are created equal.
In order to trade for a living or even trade profitably, you must have a good set of tools. One the tools that is essential is a good broker. With so many to choose from, there is no excuse for having a lousy broker.
As option sellers, we need to have an option friendly broker. This is a broker than either specializes in options, or considers option traders a very important customer base.
By using an option friendly broker you will get
- better commissions
- better margin requirements
- better prices on your orders
- better software/platforms to trade on
- better information
- and better education
How do you tell if your broker is an option friendly broker?
- If your broker advertises on national tv, it’s probably not an option friendly broker.
- If your broker is a household name ( they have their name on a stadium), they are probably not an option friendly broker.
- If your broker’s main sales pitch is how low their stock commissions are, they are probably not an option friendly broker.
So how do you find an option friendly broker?
- A broker with the word “option” in their name probably IS an option friendly broker.
- If your broker charges less than $2 for a single option or less than $30 for a dozen, they probably ARE an option friendly broker.
- If you can trade options from their own software, on the internet, or from your cell phone, you probably have an option friendly broker.
- If your broker puts on seminars and webinars teaching option strategies, you probably have an option friendly broker.
- If you can call their help desk and have them walk you through an iron condor trade, without them asking you what an iron condor is – you probably have an option friendly broker.
Finding a broker is not hard. Finding an good option broker is a little trickier. But if you ask option traders you will get many suggestions. Of if you join my site, I will show you which ones I think are the best.
Having a broker that is not option friendly, is like trading with one hand tied behind your back. Don’t do it.
Hi,
I am curious about what option broker you are using. I am currently using IB for everything but don’t really know whether it makes your requirements.
Myself is doing option selling started about this April. Let’s discuss it further if you would like.
Charles
IB is fine. I have never had an account there so I am not sure how their prices work. Per option they are the cheapest but then they have added charges that make it harder to compare. I use think or swim for most of my accounts. I like their desktop platform.
Allen
Yes, you are right. I also find the customer service is not that good – many times I couldn’t even get through the call (nobody is picking up). But like you said, it’s really cheap. In your comment, you talked about never trading future options. Can you tell me why?
I personally find futures option is a far better utilizing the margin. I trade E-mini, oil, EUR/USD options currently. Well, the liquidity may not be as good as equity options – bid/ask is pretty wide if you are used to equity side.
Thanks for your valuable advise! I have started 3 months ago virtual trading on optionsxpress.com. I understand they charge $14.95 on every transaction irrespective of stock quantity.
optionsxpress has local account in Australia and this suits me.
Trading options is new to me therefore any information comparing other option trading platforms would help.
I AM USING OPTIONS EXPRESS AND AM SATISFIED WITH ALMOST EVERYTHING.
CHARLES B
OPTIONSXPRESS is the best out of all.
But if you are buying only 1 contract you can go to TRADEKING.
All others companies are not comparable to these two. Best of the best.
I use TD Waterhouse in Canada. They charge $1.25 per option plus $9.99 regardless number of contract.
Can anybody tell me is it good price. Thanks!
I have used optionsxpress for a long time and they are great and you can push them down on there commissions if you ask, but if people are interested with trading condors on dollar strike where it takes alot of contracts you need to check out options house At options xpress a 50 contract iron condor which would be a total of 200 contracts which is not a stretch when trading dollar strikes, The commission 1 way would be 200.00 and at options house its 12.50 flat plus .15 cents a contract which would be 42.50 total thats a savings and will allow you to go further out of the money and take trades you couldnt even take before and the .15cents is good up to 4000 contracts it also makes adjustments easier. there platform is fine for condors and spreads not as good for straight option plays that would require brackets orders. may be worth a check though
Well, Interactive Brokers has been imposing Extreme Margin Model on my short strangle positions, which basically increases 30% above regular margin requirements from exchange. Do you guys have similar experiences with other brokers on this Extreme Margin Model or it’s just IB thing?
I don’t know why, but the brokers have been playing with margin requirements lately. Thinkorswim started charging margin for both sides of a double diagonal. By charging both sides, it makes the trade not worth it on a risk/reward standpoint. Also a member told me that in his portfolio margin account they have changed the way they are evaluating margin for trades.
that’s bad indeed. What about iron condor or straight strangle? Does that happen to your account as well?
I am actually switching from IB to TOS at the moment. At least from my initial evaluation, TOS charges normal margin on futures side. I’ll watch closely once trading starts.
Is Interactive Brokers a “good” options broker?
I am using ThinkorSwim. At first, I thought their prices were cway too high, but I called them and they lowered my commission rate. Plus, they have the best charting tools, which is really necessary for setting up an Iron Condor the right way. I find that it is easier to see the setup visually, so I can see what my profit points are.
I use TOS as well, but I don’t find their commission cheap at all. They maybe cheaper than OptionsXpress or Charles Schwab, but there are broker has even cheaper commission.
I stay with TOS also because their power desktop software. They also have better service.
I’m using Trade Monster. Good easy-to-use tools. I wrote some Matlab-based software to do what Trade Monster tools don’t.
I’ve tried IB’s demo tools a few times but found them confusing, especially option spreads like condors. In a fast-moving market, with large positions, I’d be frightened of making a mistake and blowing up a year or more of hard-earned profits.
I’ve been using IB for about 5 years and I’ve had no problems. Fills are great and commissions are very cheap. $1.00 or less for equity options, period.
For doing spreads and other strategies it takes some time to learn the platform. But, that is probably true with any broker.
I currently use trade king for my iron condors and I pay $0.65 per contract and a $5 flat fee. The customer service is great they will help you out in placing the trades until you get the hang of it for no extra charge. They also answer the phones even two thursdays ago when the dow dropped 1000 points.The trades are very easy to place and take only 5-10 minutes to learn.
I opened an account with TOS several years ago and found I was paying higher commissions than at OptionsXpress. A phone call got me a flat 1.25/contract with no minimum or other charges. I’ve been told that TOS will no longer grant such a rate, but I have 2 accounts there and there has been no change in either.
Is anyone getting better than $14.95 from OptionsXPress by calling to ask for a better rate? Spread trades can get pretty pricy with them after more than 5 contracts.
Think or Swim was just aquired by td Ameritrade.they claim
to still have $1.50 per spread. I agree the platform is
impressive. I started with TOS while learning options
from Investools out of Utah a few years ago.
I use IB for options as they are the cheapest and I like the option trader platform , I have had both friendly and non friendly agents on the phone , I think they are working on that as there has bean alot of mention about it
I’m sticking with IB . I have chatted with top traders that trade for a living with large accounts and they say IB is the best. Saving the commissions adds up over time and the execution is the quickest
I use TD and pay $9.99 Plus $1.25 for each contract. Service is good. Is this okay commission. I live in Canada.
I am still having trouble keeping Dr. appointments and
reading and trying to understand what i read. Basically
i am certain i will be paper trading for the next month.
who is IB?
IB is Interactive Brokers
What is your recommendation? For auto trading?