Oz Options Brokers - Redux

[wayneL]

Collecting your experiences with Oz options brokers ... again.

Specifically, CHESS sponsored for stock, the ability for multilegged orders, and preferably Oz based.

 

[Sharkman]

can't help very much unfortunately, basically all i can do is go on a rant complete with frothing at the mouth about my recent experience in this area... so i will!

i recently decided to get option trading permissions enabled on my NABtrade account where a good chunk (more than my entire IB account) of my long term buy & hold positions are held, as i thought it might be handy to have for the odd occasion where i'm looking to sell options against those positions, so they can be collateralised directly.

after answering the usual option trading questions online however, the option trading account was left in a "pending" state for weeks. no explanation was given (no tooltip on hovering over the status, no guidelines saying these are the remaining steps in the process, this is what you need to do next etc). quite sure i got all the questions right, they were the sort of questions you can answer in your sleep, so it can't have been that. had to trawl thru their website and eventually found (buried in a FAQ somewhere) that i needed to print out, fill in and send (by physical mail!) a "collateral cover authorisation" form to move it out of pending.

ok fine, i get that done, another few weeks pass, it still stays in pending. no response to my emails asking did you get the form in the post, where is it up to etc. eventually i just decide oh to hell with this, i'll just stick to IB and keep doing for eg. a bear call spread there if i want to hedge a long term stock position held in CHESS using a covered call-like strategy. 2 or 3 weeks after my last email, they finally respond saying apologies, we were busy due to an abnormally large number of enquiries blah blah blah, your options trading will be enabled within 5 working days.

indeed it did move out of pending a few days afterwards, but all up about 4-5 months total from the time i filled in the online questionnaire to the options trading permissions getting enabled. haven't even placed an option trade thru their system yet and already i have a bad taste in my mouth from the whole process. even setting up my company trust account in IB back in the day (a notoriously onerous process itself) was quicker than this!

Aust big bank brokers are in general quite rubbish when it comes to system performance and service compared to out and out brokers like IB. they're good for buy & hold, giving the added security of CHESS for people like me who are a bit paranoid about custodian accounts, but that's about it. but you probably knew that already.

 

[wayneL]

Yep @Sharkman. I share your paranoia regarding custodian accounts... quite fairly I think. So CHESS is non negotiable.

Wish list... Margin account also, not necessarily to leverage at all, but to have margin available for the encompassing option strategies.

Starting to sound like a "Bridge Too Far"

 

[cutz]

Collecting your experiences with Oz options brokers ... again.

Specifically, CHESS sponsored for stock, the ability for multilegged orders, and preferably Oz based.

Hi wayneL

For chess oz based, comsec now has online multileg functionality, all strategies available except low exercise price options, really clunky web interface, huge brokerage, once orders are in can be amended via the equally clunky webiress.

 

[wayneL]

Hi wayneL

For chess oz based, comsec now has online multileg functionality, all strategies available except low exercise price options, really clunky web interface, huge brokerage, once orders are in can be amended via the equally clunky webiress.

Any experience with CMC stockbroking? (Not the CFD platform, the chess sponsored stockbroking and options platform)

It has some good reviews but on the downside it is uk-based and maybe less clunky? I don't know I have been thoroughly spoilt by IB.

I just feel that in the current environment it is pretty important to have chess sponsored Holdings here in Australia.

 

[cutz]

Any experience with CMC stockbroking? (Not the CFD platform, the chess sponsored stockbroking and options platform)

It has some good reviews but on the downside it is uk-based and maybe less clunky? I don't know I have been thoroughly spoilt by IB.

I just feel that in the current environment it is pretty important to have chess sponsored Holdings here in Australia.

Hi wayneL

Totally agree with you regarding IB.

I have a level 4 account set up with ANZ which uses the CMC platform, looks really nice but I haven't really used it yet apart from some issuer to broker transfers, will keep you posted when I fire it up in the new year.

 

[wayneL]

Hi wayneL

Totally agree with you regarding IB.

I have a level 4 account set up with ANZ which uses the CMC platform, looks really nice but I haven't really used it yet apart from some issuer to broker transfers, will keep you posted when I fire it up in the new year.

I will look forward to that cutz

 

[Sharkman]

the first option contracts that i traded thru NAB are expiring today. i intend to let them auto-exercise (they're well ITM) but just tried to load them in the system to double check that i do indeed hold the contracts that i think i hold, and was presented with this for several minutes before i eventually gave up:

as i've always thought, the big bank brokers are mickey mouse brokers, not suitable for serious trading, just the occasional non-time sensitive trade where you want the backing of CHESS. i would be absolutely spewing if those were contracts that i needed to close out/roll on expiry day and the screen wouldn't load.

presumably their systems are struggling to cope with the volume of activity given today is expiry day on the monthlies.

so yeah, probably a bridge too far, as you say Wayne.

 

[cutz]

Hello.

My micky mouse broker initially didn't know why the XJO's aren't trading today.

Another occurrence of system down on opex day, strange !

It's not just bad oz brokers, the ASX / ASX24 is unreliable, in recent memory 3 occurrences of outages on the critical Thursday of the month.

 

[Sharkman]

Hello.

My micky mouse broker initially didn't know why the XJO's aren't trading today.

Another occurrence of system down on opex day, strange !

i've gone on rants about this before so i'll try not to do so again to spare everyone the tedium, but having seen the effects of it first hand (i'm in the software engineering field) i don't think these sorts of things are coincidences.

due to rampant offshoring in the years following the GFC, many systems are poorly built and the slightest amount of stress (such as from heightened activity on monthly expiry day) can cause them to just fall over. big banks' priority is clearly to get things done as cheaply as possible, not to provide a quality service.

i've lost count of the number of basic mistakes (the sort that i would expect any Australian grad not to make) i've had to fix over the years after the system predictably fell over at the slightest unexpected circumstance.

 

[wayneL]

Christ on a bike.

It sounds to me that any overall options trading strategy conducted with Australian brokers should avoid any sort of decision making on expiration day.

That has always been pretty much my trading style anyway... But is there any wonder that there is a general lack of liquidity (comparatively speaking) in the Australian options market?

 

[Sharkman]

Christ on a bike.

It sounds to me that any overall options trading strategy conducted with Australian brokers should avoid any sort of decision making on expiration day.

That has always been pretty much my trading style anyway... But is there any wonder that there is a general lack of liquidity (comparatively speaking) in the Australian options market?

yep that's generally what i try to do too, but as you know occasionally things don't quite go to plan and you find yourself needing to close/roll at/near expiry. you want your platform to be robust and reliable so it's there when you need it, but sadly once again the big bank brokers are proving to be anything but.

 

[Sharkman]

just tried it again. same sh#t - it won't load after waiting several minutes.

i tried pulling up one of the near the money Apr contracts over the same underlying - that had no problems loading.

looks like their system has issues with processing contracts on the day they expire it seems, so i guess the lesson here is, when using NAB (and possibly the other big bank brokers as well) to trade options, don't leave it til expiry day if you think you might need to roll/close out!

i'm starting to get a bit nervous about whether they will correctly auto-exercise my ITM long contracts after today's close now, given how brittle their systems appear to be and the fact that these are the first option contracts i've ever traded thru a broker other than IB. waiting with baited breath and starting to wish i'd done a smaller "test" trade first (but that would've meant copping the high minimum brokerage on a small position - it's just rock and hard place stuff with these mickey mouse brokers!)

 

[Sharkman]

just saw this in the news:

https://www.news.com.au/finance/markets/australian-markets/asx24-outage-technical-difficulties-halt-futures-and-options-trades/news-story/60c9b95c39223bb51e98ec654f737885

possibly that explains the problems with loading the contracts in NABtrade, so fair's fair, i probably owe them an apology for the above if this was indeed the true cause. not entirely sure it was though - i closed out a different position that also expired today on IB during the reported outage window, and that had no issues whatsoever, so i hadn't realised there was yet another ASX outage at the time.

 

[Sharkman]

i'm starting to get a bit nervous about whether they will correctly auto-exercise my ITM long contracts after today's close now, given how brittle their systems appear to be and the fact that these are the first option contracts i've ever traded thru a broker other than IB. waiting with baited breath and starting to wish i'd done a smaller "test" trade first (but that would've meant copping the high minimum brokerage on a small position - it's just rock and hard place stuff with these mickey mouse brokers!)

finally some good news - they are in fact capable of processing an auto-exercise!

that's what it's come to these days - not even being able to take basic functionality (auto-exercises, systems being available during trading hours, stuff like that) for granted, let alone stuff like margining facilities, combo orders etc.

 

[wayneL]

finally some good news - they are in fact capable of processing an auto-exercise!

that's what it's come to these days - not even being able to take basic functionality (auto-exercises, systems being available during trading hours, stuff like that) for granted, let alone stuff like margining facilities, combo orders etc.

I have to admit that I am still dithering on this.

Comsec seems to fulfil my bucket list on paper, but I have heard a fair few stories of frustrating experiences... and CMC has the concern of not being Australian based. That may never be an issue but my perception of geopolitical risk makes me nervous about that.

Perhaps I might have to limit myself to cash covered short puts and verticals/diagonals, and the synthetic variants thereof.

Perhaps, that's all the complexity that Australian brokers can deal with efficiently?

 

[Sharkman]

Perhaps I might have to limit myself to cash covered short puts and verticals/diagonals, and the synthetic variants thereof.

they should be ok for cash covered short puts. but i couldn't see any indication of an ability to execute combo orders on the platform (if it's there, it's rather difficult to find), so for verticals/diagonals you're probably going to have to punch them in 1 leg at a time and cop the slippage risk.

i googled "nabtrade options combo orders" and all the top results were missing "combo". maybe commsec has them, not sure. i'm just going to stick to simple single legged trades, any spreads i'll use IB.

 

[wayneL]

they should be ok for cash covered short puts. but i couldn't see any indication of an ability to execute combo orders on the platform (if it's there, it's rather difficult to find), so for verticals/diagonals you're probably going to have to punch them in 1 leg at a time and cop the slippage risk.

i googled "nabtrade options combo orders" and all the top results were missing "combo". maybe commsec has them, not sure. i'm just going to stick to simple single legged trades, any spreads i'll use IB.

Yeah.

I was hoping to have a simple consolidated solution, Alas I may have to do the same as you... I just hate shunting cash around different accounts

 

[cutz]

Yeah.

I was hoping to have a simple consolidated solution, Alas I may have to do the same as you... I just hate shunting cash around different accounts

Although extremely cumbersome comsec do offer combination orders via the website, all strategies are available, still some glitches to iron out, the iress platform does not have combination order entry functionality, only the ability to amend once the order is in.

Still playing around with the ANZ (CMC) platform.