Trading US options

[mullokintyre]

Tonight is triple witching trade day in the US.

Friday could be a historic day for the U.S. options market, according to a derivatives strategist at Goldman Sachs Group.

As trading in U.S. stock options, especially extremely short-dated zero day to expiration options, continues to boom, contracts attached to $3.4 trillion worth of U.S. stocks, exchange-traded funds and equity indexes like the S&P 500 are set to expire Friday during September’s expiry for monthly and quarterly options, according to the latest figures from John Marshall, head of derivatives research at the investment bank that were accurate as of midweek.

That is on track to be the largest September expiry on record, raising the possibility that markets could finish the week on a volatile note. Friday’s session is what’s known as “triple witching” day, when single-stock equity options, equity index options and U.S. stock index futures for the month and the quarter all expire on the same day.
In a breakdown of notional value due to expire, Goldman showed that nearly $2 trillion of S&P 500 index options are due to expire Friday morning, while single-stock options with a notional value of $555 billion will expire later in the day, along with a host of other contracts.

Almost worth staying up into the wee hours of the morning to watch it all unfold.
Mick

 

[peter2]

There was action aplenty after the news. US equities tanked and gold zoomed. It was a thing of beauty.
Hope gold holds this rally as it'll boost the open for the gold producers on Monday.

 

[Dingo34]

I use IBKR. Contract pricing I believe is way cheaper than ComSec

I've been with Saxo but am looking elsewhere and I tried to sign up with IBKR but the application process said I can't trade options, and when I asked via email they can't tell me anything other than 'You must have not entered the required details (knowledge level, income level, experience level, etc) in order to be approved for options trading. If your situation changes you can add this to your account.'

 

[DaveTrade]

I've been with Saxo but am looking elsewhere and I tried to sign up with IBKR but the application process said I can't trade options, and when I asked via email they can't tell me anything other than 'You must have not entered the required details (knowledge level, income level, experience level, etc) in order to be approved for options trading. If your situation changes you can add this to your account.'

Hi @Dingo34, you probably missed a couple of option questions. I had a go at signing up a while back, I had a good knowledge of the basic options that I was using but I hadn't bothered to study the ones that I wasn't intending to use.

 

[Dingo34]

@greekgeek I'm using Saxo at the moment but I'm looking at changing to Tastyworks, both are now located in Australia.

im not happy with Saxo, there is clear lack of support

Hi @Dingo34, you probably missed a couple of option questions. I had a go at signing up a while back, I had a good knowledge of the basic options that I was using but I hadn't bothered to study the ones that I wasn't intending to use.

yeah i tried several options (pardon the pun), i answered i was an expert with >10 yrs experience, no go, i answered that i had liquid assets of over $100K (i might have even said over $1 mill) but it didnt matter what i answered it said cant trade options

 

[ducati916]

I've been with Saxo but am looking elsewhere and I tried to sign up with IBKR but the application process said I can't trade options, and when I asked via email they can't tell me anything other than 'You must have not entered the required details (knowledge level, income level, experience level, etc) in order to be approved for options trading. If your situation changes you can add this to your account.'

So Tastytrade are excellent.

Execution: excellent;
Platform: good/excellent
Helpdesk: excellent
Commissions: low to zero (no commissions on closing trades and very low on opening trades).
US Options, Stocks, Futures, etc.

Pretty easy to open an account, easier than most.

Can't recommend them enough.

The link is a referral: https://start.tastytrade.com/#/login?referralCode=RRMD9SDQ6C

If you use it I'll donate the fee to Joe Blow.

jog on
duc

 

[Dingo34]

So Tastytrade are excellent.

Execution: excellent;
Platform: good/excellent
Helpdesk: excellent
Commissions: low to zero (no commissions on closing trades and very low on opening trades).
US Options, Stocks, Futures, etc.

Pretty easy to open an account, easier than most.

Can't recommend them enough.

The link is a referral: https://start.tastytrade.com/#/login?referralCode=RRMD9SDQ6C

If you use it I'll donate the fee to Joe Blow.

jog on
duc

thx mate...was about to start a whole new post on this topic lol but i'll ask here first in case you've experienced it.

so i started a new job which now finds me home every second night and because it's nightshift im awake all night so ive decided to try my hand at trading options ...this is my speculation account, it's money i can afford to lose..so with that said, here is the issues i have found with Saxo

i am trading 0DTE options, using risk defined strategies which so far have used credit spreads, butterflies and last night iron condor. now what i have experienced is that at 2pm ET (new york) saxo will close my positions no matter whether they're in the money or out of the money, claiming margin utilization, which is a little confusing because the whole point to risk defined is to negate the whole margin issue.

Last night in particular I set up a iron condor on QQQ's with QQQ at around 437, short call at 438, short put at 436, longs outside these...I was supposed to get a premium of $43 per contract if it expired OTM...so at 2pm with QQQ around 436.40ish my margin utilization goes from 19% all the way up to 100%+ in a matter of seconds despite QQQ still trading above 436.40ish...they closed all my positions with a small loss in total..and then QQQ still closes above 436...i am wondering if all brokers are doing this?

 

[ducati916]

thx mate...was about to start a whole new post on this topic lol but i'll ask here first in case you've experienced it.

so i started a new job which now finds me home every second night and because it's nightshift im awake all night so ive decided to try my hand at trading options ...this is my speculation account, it's money i can afford to lose..so with that said, here is the issues i have found with Saxo

i am trading 0DTE options, using risk defined strategies which so far have used credit spreads, butterflies and last night iron condor. now what i have experienced is that at 2pm ET (new york) saxo will close my positions no matter whether they're in the money or out of the money, claiming margin utilization, which is a little confusing because the whole point to risk defined is to negate the whole margin issue.

Last night in particular I set up a iron condor on QQQ's with QQQ at around 437, short call at 438, short put at 436, longs outside these...I was supposed to get a premium of $43 per contract if it expired OTM...so at 2pm with QQQ around 436.40ish my margin utilization goes from 19% all the way up to 100%+ in a matter of seconds despite QQQ still trading above 436.40ish...they closed all my positions with a small loss in total..and then QQQ still closes above 436...i am wondering if all brokers are doing this?

Mr Dingo;

So for 'reduced margin':

But to your question:

You have the 'option' of having the risk team manage or not.

Now clearly if you state that you will manage and don't, that option will disappear very quickly. Probably the best way forward is to discuss your requirements directly.

jog on
duc

 

[Dingo34]

thanks for that mate

 

[DaveTrade]

thx mate...was about to start a whole new post on this topic lol but i'll ask here first in case you've experienced it.

so i started a new job which now finds me home every second night and because it's nightshift im awake all night so ive decided to try my hand at trading options ...this is my speculation account, it's money i can afford to lose..so with that said, here is the issues i have found with Saxo

i am trading 0DTE options, using risk defined strategies which so far have used credit spreads, butterflies and last night iron condor. now what i have experienced is that at 2pm ET (new york) saxo will close my positions no matter whether they're in the money or out of the money, claiming margin utilization, which is a little confusing because the whole point to risk defined is to negate the whole margin issue.

Last night in particular I set up a iron condor on QQQ's with QQQ at around 437, short call at 438, short put at 436, longs outside these...I was supposed to get a premium of $43 per contract if it expired OTM...so at 2pm with QQQ around 436.40ish my margin utilization goes from 19% all the way up to 100%+ in a matter of seconds despite QQQ still trading above 436.40ish...they closed all my positions with a small loss in total..and then QQQ still closes above 436...i am wondering if all brokers are doing this?

Take a look to see if trading the 0DTE option of the next day (1DTE) will help.

 

[Dingo34]

Take a look to see if trading the 0DTE option of the next day (1DTE) will help.

what ive noticed is that it doesn't matter which broker you use, any options strategy will be closed out a few hours before expiration (even those longer than 0DTE) if the strategy has any short option leg in it, whether it's risk defined or not, whether it's OTM or not, unless you have the total amount in cash to buy the 100 stock/etf, and the basis behind this is that no broker can know if an option is going to be exercised, and believe it or not, even those that close OTM can still be exercised by dumb traders...all good lesson learned

 

[DaveTrade]

what ive noticed is that it doesn't matter which broker you use, any options strategy will be closed out a few hours before expiration (even those longer than 0DTE) if the strategy has any short option leg in it, whether it's risk defined or not, whether it's OTM or not, unless you have the total amount in cash to buy the 100 stock/etf, and the basis behind this is that no broker can know if an option is going to be exercised, and believe it or not, even those that close OTM can still be exercised by dumb traders...all good lesson learned

@Dingo34 the whole point of using the 0DTE of the next day is that you will be trading the position on the day of expiration.

 

[Dingo34]

So Tastytrade are excellent.

Execution: excellent;
Platform: good/excellent
Helpdesk: excellent
Commissions: low to zero (no commissions on closing trades and very low on opening trades).
US Options, Stocks, Futures, etc.

Pretty easy to open an account, easier than most.

Can't recommend them enough.

The link is a referral: https://start.tastytrade.com/#/login?referralCode=RRMD9SDQ6C

If you use it I'll donate the fee to Joe Blow.

jog on
duc

What way did you find best and cheapest to fund your account and to make withdrawals?

 

[ducati916]

What way did you find best and cheapest to fund your account and to make withdrawals?

Mr Dingo,

Initially I did a transfer from my previous brokerage (securities transfer) to Tastytrade. This went smoothly, no issues at either end.

After that I simply use a bank transfer.

jog on
duc

 

[Dingo34]

has anyone checked out WeBull?

 

[DaveTrade]

@Dingo34 the whole point of using the 0DTE of the next day is that you will be trading the position on the day of expiration.

For anyone that may be interested, this post should read 'that will NOT be trading the position'. Sorry for not proofreading the post.

 

[Dingo34]

For anyone that may be interested, this post should read 'that will NOT be trading the position'.

I actually thought that was what you meant....and that was my point...it doesn't matter if I trade any expiration, if I leave it until the last day they will close it all out at 2pm ET. I even had Saxo close out a 'long put' at 2pm instead of letting it expire worthless (I had previously closed out the corresponding short earlier in the day) citing margin concerns. So in a nutshell, based on my experiences over the last 2 weeks, it doesn't matter what expiration you trade, it doesn't matter whether you buy or sell options, saxo at least, will automatically close out your positions a few hours before expiration if you do not also have the cash equivalent of 100 stocks

 

[DaveTrade]

I actually thought that was what you meant....and that was my point...it doesn't matter if I trade any expiration, if I leave it until the last day they will close it all out at 2pm ET. I even had Saxo close out a 'long put' at 2pm instead of letting it expire worthless (I had previously closed out the corresponding short earlier in the day) citing margin concerns. So in a nutshell, based on my experiences over the last 2 weeks, it doesn't matter what expiration you trade, it doesn't matter whether you buy or sell options, saxo at least, will automatically close out your positions a few hours before expiration if you do not also have the cash equivalent of 100 stocks

Sorry @Dingo34, you were just giving us information, I thought that you were asking how to avoid this with 0DTE options. Please let us know what you think of Tasytrade if you decide to switch to them.

 

[basilio]

Came across this program which explained how the market and pricing of options was discovered in the US.

Thought it might be interesting/useful in this thread. Give it a few minutes. It will certainly make you sit up and take notice.