Options Trading through Full Service Broker

[Largesse]

QQ,

I know the majority of people around here trade through IB, but was just wondering if anyone has traded options through a full service broker?

Roughly what kind of commissions/fees am i going to be expected to stump up? (rough industry standard?)
The bulk of trading will be fully collateralized.

I know IB are priced at $3 AUD per contract which I expect is roughly industry standard for online brokers.

I know I can call up and just ask the broker, but I was just hoping to get a rough idea of what he's going to try and whack me for vs what is industry standard before hand , so I have a better position to negotiate from


Thanks in advance

 

[cutz]

Hi Largesse,

Personally I'd steer clear of full service brokers for trading options, pretty labour intensive and most brokers probably wouldn't have a clue anyhow. If they do have a clue numerous daily tweaking would probably chew hard through profits.

 

[RazzaDazzla]

Pfft, brokers... pfft!

Traded options through a broker about 8 years ago. Broker was a muppet! Encouraging me to write Call credit spreads over a bull market.

Only cared about my number of transactions so he raked in commision. (about $88 per transaction)
He always had a story as to why a trade wasn't going as expected.
He never said a word to me about risk management, position sizing etc.

They're a bunch of muppets!

 

[CascadeX]

With the analytics required for derivatives, the electronic and online model is becoming the standard these days.

IB is more focused at the retail/semi-professional level. With full service brokers however, they are geared more to institutional investors and not retail. So it costs alot.

Full service brokers are lagging however, e.g. Macquarie only now offering their newly revamped online/electronic service.

Look for Goldman Sach's RediPlus offering, JP Morgan's Neovest or Morgan Stanley's Passport business. Expect to pay a premium but.

 

[Front Runner]

As an ex broker I agree many are a bunch of muppets! They are a bit like economists, in that they will always know tomorrow why the trade they recommended yesterday didnt make money today!

One advantage however with full service is that most only take the ACH margin. Being risk adverse, I hate when brokers like commsec take enormous margins, which forces you into a margin call position when the market moves the tiniest bit against you. Full service means you can negotite when you finally do get into margin during huge moves against you. I dont like the idea of a computer taking over and liquidating my option positions by absolutley smashing them into the market right on the open.

having said that, my broker charges $110 a side, which is insane. For trading massive volumes only.

Oh and one final thing, a full service broker can also call market makers for you and get flow in some of the smaller names. But like i said, you have to be trading huge or not worth it.

 

[cutz]

having said that, my broker charges $110 a side, which is insane. For trading massive volumes only.

$110 a side may not be that insane, what sort of volume are you pushing ?

 

[cutz]

What's up with the recently mentioned outfit, for real or something else.