It would depend on your trading style, but trading through TDA would certainly be more cost effective than trading through options express, and TDA's TOS tools are second to none imo. Understand though that many plays on this board involve OTM (out of the money) options which will be priced low, so let's say for example an option is priced at .05 (so $5 per contract), and someone on this board who you respect buys the options at that price and you would like to as well.
Let's say you start with $1,000 in your account, and you only want to spend $50 on each options trade (note that this is high and you usually only want to be using 1-2% of your total liquidity for options trading on one trade at any given time).
So, you buy 10 contracts at .05 (or $5 since you multiply the options price x 100 to get the price of one contract) a piece at TD Ameritrade. Now here is the problem, you have to pay $9.99 + .75 per contract to TDA. So you've bought $50 worth of contracts but you've also spent $17.50 in commissions! So now your cost basis is $67.50 and you only have $50 worth of options. Now let's say the option goes to .10 from .05. You've made a double, nice work! Your $50 option is now $100, nice!
But not so fast. Now you have to pay the commissions again to be able to trade out of the option. So you pay the $9.99 + .75 per contract commission again. So now you've spent another $17.50 in commissions, so $35 total, and even though you've doubled your money from $50 to $100, you've really only made $15! ($100 profit - $50 options cost - $35 in commissions). Just to break EVEN on this trade you needed an increase in the option price of 70%. That's insane to try to do consistently.
You can see how these plays would be off-limits to you, and you'd be limited to buying a higher or lower strike price which would be more suitable for your commission and fee structure. For instance if this were a $100 strike price on stock XYZ and it were priced at .05, perhaps you would have had to buy the $98 strike price for .50, so that you would only have to buy one contract instead of 10. Even then, you would have to make a considerable gain to break even, and if the stock moved up quickly you wouldn't reap the benefits that you would have if you had been able to buy the .05 options.
If we had made the same trade at optionshouse you would have been able to buy those same contracts for only $8.95 + .15 per contract, or a little over $10. This would have saved you an extra ~$14 in commissions just on this ONE trade. That's $14 more in your portfolio to trade with, or $14 for you to spend on your wife at dinner : P
Anyway hope this helps, it is important to have great tools and great pricing, which is why sometimes using the best parts of each broker at the same time can be beneficial.
Wow this was hard to type on a phone haha.
AI
