Option Commission Option Suggestion
I'm suggesting an alternative option commission schedule, where you would pay a per option flat rate. For example, .95 / contract with no base charge.
The reason I'm suggesting this is that it's cost prohibitive to do 1 or 3 contract purchases. For some traders, the current commissions will work better. That's why I'm only suggesting this as an alternative option.
Just throwing it out there.
I certainly recognize the right of anyone to spend their money in whatever way they wish, as long as that doesn’t overtly impede someone else from “life, liberty….” As a corollary, I also believe that if you are to find some semblance of happiness in this life, you are best not to go around measuring other people’s wallets. All that granted, if you are concerned about paying a buck or two versus $5-$8 dollars per trade, then I think you might have your measure of risk out of whack. I am not just saying that the difference of under $10 a trade shouldn’t be the determinate of your trade, but consider this amount to the value that is at risk.
I realize that we all have to start out somewhere, and at some time, but if your value at risk (what the trade could lose if everything blew up) is measured in only a couple of hundred dollars, then perhaps you shouldn’t be trading options but putting your money at much less risk. To bank on your skill to pick the good option trade, and here I’m assuming that you are buying calls (ITM or not) is to be taking on more risk than buying a ‘bluechip’ stock.
If your value at risk is measured in a thousand or more, then what is less than $10 in the scheme of things. If I buy a thousand dollars worth of stock, $10 one way or the next, doesn’t mean I would do anything. If I was looking for a 20% gain, I could sell at a profit of $190 and not lose a bit of sleep, especially if my opinion was the stock might go lower.
I like low commissions as much as the next guy, but when they are ‘low enough’, then good executions, and good customer service matter as much if not more so.
I agree with the above risk comments, so this alternative fee schedule would encourage, or not punish, smaller traders.
ST, it appears that this is just the type of trade that I was talking about with doougle. If the commission for one call equals the profit, let’s be generous and say commission in and out, well we are talking about less than $12 profit. Now, what was your risk if the trade went wrong? How much could you have stood to lose before you pulled the plug on it? If you could have been down a couple of hundred, then it would take quite a number of good trades to make up for one bad one. Well, how often does that happen? If you are buying calls, I doubt that you have the percentage of gains that I see selling options. Look at your record of trades, it is not unfair to predict the your future returns will be similar to the past (unless you change what you are doing.) Yes, I will admit that you may get better at it after some time, but you won’t go from 40% wins to over 90%, just with a little experience.I am not trying to tell you how you should trade; I am trying to get you to look at what is truly at risk in the manner that you have been trading.