Or sign up with email. Meetup members, Log in. According to the following post, just tell then you are an Interactive Brokers user! By the way, you can open an account initially without funding it and get free quotes! Try their paper account, it is in a different league for option traders http: Futures options are higher.
Hi Don, I remember that you did a presentation that touched on option brokers a little while ago. Who would you recommend as an option broker these days? Would you agree with that person on elitetrader forums that says IB's accounts are in a different league for option traders?
In my own case, I look forward to starting a small account soon and trading credit spreads. If you want to do both stock options and futures options, the most viable choice, except for large accounts, is IB in my opinion because TOS has limitations in splitting funds between stocks and futures. Think or Swim is easiest to use but commissions are more expensive and it may be hard to get approved for some selling strategies.
Also TOS may be reluctant to approve people for credit spreads so you might not get approved anyway. IB is cheapest and is functionally fine but not quite as easy to use unless you are a tinkerer. And everything at IB is automated, no sales droids. And at IB, there is one pooled virtualized account with all of your funds that you can use for stocks, futures, forex, whatever, without having to do fund transfers between accounts as you do at most brokers. But you can open a stock account at TOS with zero dollars and use all of their their tools, including live futures options quotes, but actually trade at IB or elsewhere for the better rates.
Ignore their sales droids when they call or tell them you are evaluating it. One guy on EliteTrader says he has had an unfunded TOS account for 6 years and they never cut him off. Now, all of that said, I myself have given up on IB for now because of their higher and inconsistent margins on distant futures options months and other peculiarities that would probably not affect you right away.
This is for futures options - I do not trade stock options myself. They have all conceivable futures options combinations including many not available on IB or TOS but they do not display deltas etc. You have to negotiate rates with Cunningham but I can give you a contact and help you get a decent rate there if you decide to explore that option. I actually think Cunningham may be the best choice for many reasons including speed of executions and flexibilities re margins, but they have no modeling tools built in.
If you want a really easy futures account opening process with lowest fees, low minimum account size, and no need to negotiate, everybody loves http: They will approve small accounts no problem. They are similar to Cunningham but offer many platforms. You would need the free zero-dollar TOS account as well probably for strategies.
So, IB might be easiest to start with for many but it depends on your criteria. If you want more info. By the way, I now have developed an options historical back tester in R that tests complete strategies over the past 5 years using mostly actual futures options data. If you give me a sample simple strategy I may be able to run it for you. It is fast because I do everything on large arrays - no loops. There is nothing like this that I am aware of in any commercial software!
Oh I should have added re Cunningham and DeepDiscount that there is one issue with them. Their software does not fully track margin properly in real time for options. You have to negotiate intra-day margin parameters with them and then they change the defaults on your account accordingly to be more suitable for futures options. There are some issues with them too, though. In particular, IB will liquidate you at market intraday if you go over what their undocumented algorithms consider the margin to be!
And they will not negotiate at all on margin. With the smaller firms, you can discuss these things with them and they are more flexible. Both Cunningham and Deep Discount will set up margins suitable for options strategies, but you have to work out the risk parameters with them for your account.
That is a slight hassle. Almost all firms that do it this way require you to specify in advance what markets you will be trading for example Emini, Corn, Wheat etc. I do not like that because I want to be able to trade anything and everything on a moment's notice without having to call them up. Cunningham Commodities was one of the very few smaller firms I found that would set up the account parameters to allow me to trade any and all options markets at any time without having to call them up.
The reason they can do that is that Cunningham companies are also the actual developers of the widely used CTS T4 software. Because of that, their brokerage firm trusts their software and just uses generalized parameters within CTS T4 itself, without adding another layer of rigid constraints on what you can trade and how many contracts you can trade in each market.
The other firms cannot do that because they offer many trading platforms and want to use a lowest common denominator approach to setting risk parameters that works on all platforms. But if you are just trading options on stock indices or whatever, you may not care so much about that.
Thanks a ton Don! I'll investigate when I'm back in town after this weekend. So yes, per ticket pricing can be cheaper where you have enough legs on the same ticket.
According to their web site: But pricing is not everything. Thanks Don, I was talking about options here. Ive had accounts with other brokers, like Scottrade, which is good but doesnt support options, Optionshouse, which is ok but limited in its tools, fidelity, is ok also.
TD ameritrade is a little high on transaction fees, but the TOS platform is superior to anything I have seen. It is nice to be able to graph out multi legged trades. Aslo ive really gotten into tastytrade, which uses the TOS platform, so its nice to think through the examples using the same platform that they use.
Your name will be public. Sign up using Facebook. Edited by Don Brady on Oct 12, 8: Edited by John Cosgrove on Oct 10, 4: Edited by Don Brady on Oct 12, Edited by Don Brady on Oct 11, 3:More...