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Interactive Brokers Dilemma for Aussies

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neletto

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In order to use option strategies, even if you use a simple Iron Condor you need a margin account with IB.

To open a Margin account, you must open an account as a Company rather than individual as they don't accept Australians as individual accounts for margin. This creates one big problem; market data fees. To trade US Options you have to pay USD37, plus USD45 for NYSE plus USD25 for NASDAQ, and so on... whereas for individuals it is under USD10 in total.

Is there anyone on the same boat and decided to use a different platform for US options?

Thanks!
 
neletto said:
In order to use option strategies, even if you use a simple Iron Condor you need a margin account with IB.

To open a Margin account, you must open an account as a Company rather than individual as they don't accept Australians as individual accounts for margin. This creates one big problem; market data fees. To trade US Options you have to pay USD37, plus USD45 for NYSE plus USD25 for NASDAQ, and so on... whereas for individuals it is under USD10 in total.

Is there anyone on the same boat and decided to use a different platform for US options?

Thanks!
Click to expand...

Not quite what you are asking, bit I have both a margin a/c through a company and an individual no-margin account. I haven't subscribed to IBs market data, but I was wondering the feasibility of getting the data on the individual a/c (and run on my iPad say) while doing the trading on my iMac.

Since you have looked at it, do you know what option data IB provides when you do subscribe. Is it just real-time quotes or does it include the Greeks etc.
 
I have both as well so I check data in the non-margin individual account and do the trading in the other one but it is really slow paced and not very convenient. Sometimes I feel like blind not even seeing the BID ASK prices is really hard.

You need to get market data for each exchange to get the greeks. To get volume and pricing data you need to subscribe OPRA. So if you want ETF,s, NASDAQ and NYSE. For options, you need 4 different market data subscription. All total over USD100 per month! Crazy expensive.
 
bellenuit said:
Is that USD100 the cost to individuals or professionals?
Click to expand...
proffesionals, that is business accounts. You can not open any short option positions with an individual account. So as soon as you use business account, you are classified as professional.
 
neletto said:
proffesionals, that is business accounts. You can not open any short option positions with an individual account. So as soon as you use business account, you are classified as professional.
Click to expand...

Sorry, I'm new to Options trading so I'm trying to come to terms with some of the terminology. I thought shorting an option means to sell either a call or a put. I have sold both calls and puts in my individual account in the last week. However, the calls were covered calls and I had sufficient cash to cover the puts if assigned. I assume when you say you can't short, you mean sell naked calls or not have sufficient cash to buy the underlying if your put is assigned?
 
bellenuit said:
Sorry, I'm new to Options trading so I'm trying to come to terms with some of the terminology. I thought shorting an option means to sell either a call or a put. I have sold both calls and puts in my individual account in the last week. However, the calls were covered calls and I had sufficient cash to cover the puts if assigned. I assume when you say you can't short, you mean sell naked calls or not have sufficient cash to buy the underlying if your put is assigned?
Click to expand...
Yes that's what I meant. Sorry I am newbie as well maybe my terminalogy wasnot right. I should say opening naked positions
 
I have a broken butterfly strategy working well in a IB cash account. If you have one you could check how the margin works with flies vs credit spreads.

I'm hoping that the move to IB Australia is a pre-cursor to them offering margin accounts again to individual Australian residents.

Alternatively Ox is becoming Schwab Australia and has reduced option fees so it's about the same as IB for the hedged credit put spread strategy I use and there's usually no margin problems or account fees. If you're new to options Ox is a better place to start for US options.
 
brisman said:
Alternatively Ox is becoming Schwab Australia and has reduced option fees so it's about the same as IB for the hedged credit put spread strategy I use and there's usually no margin problems or account fees. If you're new to options Ox is a better place to start for US options.
Click to expand...

Interesting. I might take a look at them once the Schwab conversion takes place on Oct 10th, so that I can fully see what is on offer.

The option fee of USD1.50 per contract, but with a minimum of USD14.95, is a bit off-putting for high value underlying stocks like APPL, particularly if selling covered calls. I usually only do 1 contract at a time which costs me about USD 1.10 with IB, but would cost USD 14.95 with Schwab.
 
As a client I'm paying Online trades: $4.95 + $0.65 per options contract.

So Ox/SA is more competitive with IB when you are doing multiple options contracts. Mine are usually three and four contracts so the cost per contract with four (last night) was $1.89.

Yes I'd also wait so you don't have to go through the conversion process as well as seeing what's on offer.
 
Hi,

Just so you know, IB has announced their Australian company (just yesterday). I believe this will now allow individuals to have margin accounts.
 
i4ever said:
Hi,

Just so you know, IB has announced their Australian company (just yesterday). I believe this will now allow individuals to have margin accounts.
Click to expand...
Yes heard that news but does that mean we can really open margin accounts? and second question it raises is, DO we still get SIPC protection for our funds if not that s a a worry , IF IB Australia fails the Australian Financial Guarantee fund probably is too small ! assuming the mixed account of IB AUS is covered by AFG
 
I imagine there are substantial claims against the SEGC fund already with the BBY debacle.

Also it seems they have disallowed claims for IB clients anyway. Like the solicitors funds could there be a shortfall?
 
Just started in the new year. All you require is an SOA from your financial advisor or if you dont have an SOA they get Equifax to do a report on you. From a cost point of view SOA from a registered financial advisor will cost you between 3300 to 7000 for them to produce so it's a no brainier to go the other route. Just say no to having an SOA on the application and it will then give the other option.
 
Good point. I am sure "(subject to change in IBKR Australia’s sole discretion)" means that this might be negotiable.
 
i don't know about being negotiable on a customer by customer basis, i think they're hinting that it may be expanded in the future, but they're just testing the waters from a regulatory standpoint first by offering a very limited margining facility and see how it goes from there.

i have long held the suspicion that ASIC/APRA/whoever are being extra stringent on IB to help protect the ripoff local brokers from losing business to them, as there is no way they can compete with IBs product offerings and brokerage rates.

it would not be the first time something like that has happened. in Singapore the local brokers typically charge about 0.28% on SGX trades. IB charges 0.08%. IB is currently banned from offering SGX trading to Singapore residents. what's going on there? i'll let you draw your own conclusions.
 
I read that the margin can't be applied to ASX24 products - so cash will still be required for SPI futures positions.

Re. the SOA, is a letter from an accountant sufficent?
 

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