US Options trading from the UK

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tradermic

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Hi all.

I live in the UK and want to start trading Options. I have looked at some brokers.

* Interactive brokers - Lots of commissions and charges for mundane things like modifying orders, and stream fees.

* OptionsXpress - Seems well known and reputable.

Which one is the best for UK traders that want to trade US stocks and options? I want to be able to sell to open, and buy LEAP options for risk-free Collars.


My main concern is having to convert my GBP into USD: I have been burnt before when using a GBP currency to buy US shares because of the conversion before and after purchase. Have any of you had this experience and how do you mitigate it?

Thanks.
 
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IB won't charge fees that aren't unreasonable so the fees you see are fair.
 
tradermic said:
Hi all.

I live in the UK and want to start trading Options. I have looked at some brokers.

* Interactive brokers - Lots of commissions and charges for mundane things like modifying orders, and stream fees.

* OptionsXpress - Seems well known and reputable.

Which one is the best for UK traders that want to trade US stocks and options? I want to be able to sell to open, and buy LEAP options for risk-free Collars.


My main concern is having to convert my GBP into USD: I have been burnt before when using a GBP currency to buy US shares because of the conversion before and after purchase. Have any of you had this experience and how do you mitigate it?

Thanks.
Click to expand...

Hi there
I use OPTIONSXPRESS

To avoid conversion for each trade you can transfer an amount into the account in USD. Then for your trades you won't be charged currency commission.

Read the FAQ on the optionsXpress site about "seeding" your account. I do a one time Wired transfer to the Bank in Chicago

http://www.optionsxpress.eu/about_us/faq.aspx

Hope this helps

Don't pay currency commission charges for each trade -- the Banks have already taken TOO much out of the economy already.

You'll (as an EU / Non US resident) also need when opening an account at OptionsXpress to fill in an exemption from US witholding tax -- form will be supplied when opening the account. -- Also no UK stamp duty etc.

Remember when trading US options -- you can theoretically be "Called" or "Put" any time during the life of the option although this is rare -- and a contract is for 100 shares not 1000 as in the UK.

OptionsXpress also has WEEKLY option trading too -List of tradeable options for "Weeklys" as they are known can be got from the CBOE. These expire every Friday -- you can trade the following weeks stuff from the THURSDAY NIGHT before Friday expiration too.

Trade costs -- 9.95 USD for Shares / Stocks, 14.95 USD for Options.

Here's the link to the CBOE site for the weeklys so you can see what's tradeable.

http://www.cboe.com/micro/weeklys/introduction.aspx


Cheers
jimbo
 
jimbo45 said:
Hi there
Remember when trading US options -- you can theoretically be "Called" or "Put" any time during the life of the option although this is rare -- and a contract is for 100 shares not 1000 as in the UK.
Click to expand...

Is it right that US Futures Options can only be exercised on the expiration date?
 
tradermic said:
Is it right that US Futures Options can only be exercised on the expiration date?
Click to expand...

US options can be exercised ANY TIME during their life time. This has advantages since with time value you can CLOSE a position quickly and then SELL / BUY another option.

In general however unless markets move massively its unlikely you will get CALLED or PUT until expiration. It certainly hasn't happened to me yet that I've been "PUT" or "CALLED" before expiration.

European options can only be exercised on Expiration date.

Cheers
jimbo
 
Yes I have account with a few different brokerages but TradeMonster is by far the best for options trading...I guess it depends on what you plan to trade but for trading spreads, TM has all the tools and very good commission rates.
 
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I have recently opened two US based broker accounts to replace the account I had with Hartmann Capital which is in the process of being closed down by the FCA - they were using segregated client account money to fund the company's running costs as their own bank account was £1.5m short (unknown to the many excellent brokers who worked there).
I first opened an account with Charles Schwab, a fairly long winded process, only to find, when the account was open that despite them having many dedicated options traders, they don't trade any options on the CME - ie most of the options that I trade: oil, gold, soft commodities etc. So I had to open an account with the CS subsidiary, OptionsXpress. BUT although owned by CS, they have an entirely different account opening procedure and are not allowed to accept automatic transfer for CS customers. The good news is that CS plans to integrate OX into one trading platform and CS also plan to trade UK based options - hopefully both next year.
 
Charles Schwab has very limited features for Options trading and you need £10k open deposit. After much research I used to use OptionsXpress, but now use Interactive Brokers, who have the lowest charges. As mentioned in a thread previous, best to over fund your account to avoid per transaction currency fees, etc.
 
I have tested Interactive Brokers and find their site to be severely lacking. In the long run the savings are in the 10% to 20% range but you have limited abilities as regard to options trades. Also I find the web site often has trouble loading my account and makes you jump through hoops. This is my main problem with them as I cannot deal with site problems or extra hoops when I want to make a trade. Move to Trademonster and you will be happy. Stocks have now been lowered to $4.95 per trade for any quantity. Options have always been close to the best deal out there and the quality and speed of trading information is unparalleled by anyone. I also have overseas friends who report no problems.
 
tradermic said:
Is it right that US Futures Options can only be exercised on the expiration date?
Click to expand...

This "european style" is true with most options based on index futures (XSP, XEO..). Not only US futures, but also DAX, ESTX50, FTSE....

Regards
 
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malco3h said:
I have tested Interactive Brokers and find their site to be severely lacking. In the long run the savings are in the 10% to 20% range but you have limited abilities as regard to options trades. Also I find the web site often has trouble loading my account and makes you jump through hoops. This is my main problem with them as I cannot deal with site problems or extra hoops when I want to make a trade. Move to Trademonster and you will be happy. Stocks have now been lowered to $4.95 per trade for any quantity. Options have always been close to the best deal out there and the quality and speed of trading information is unparalleled by anyone. I also have overseas friends who report no problems.
Click to expand...

Rather strange what I read here in this thread about IB. IB is one of the strongest players on the options market, owning one of the biggest marketmaker (TimberHill), having owned a large share of one of the options exchanges, offering the best executions, best technology (TWS) and pricing for retail traders. And they are a honerous and fair firm and they care. Just not for newbies who need lots of handholding and guidance.

Yes Trademonster and TOS are great firms, but IB is in a diferent class: You want to get the best conditions on US-exchanges or japanese stocks or options in Frankfurt or Forex or even CFDs -- IB usually is yout best choice. ALas with a steep learning curve.

Trading via there website is like cruising in a chevy, trading via their TWS is your ride in a PORSCHE, manual gear shifting.....

Regards
 
I would agree that IB will offer the global and institutional investor many things that others sometimes don't. However, the largest quantity of traders will be much better served by trying TS. Take a free look and test the various information and trading tools that they offer. I would only warn that as typical, the paper trading will only fill on bid and ask prices whereas history shows that 90% or so of trades can be filled halfway between them.
 
Move to Trademonster and you will be happy. Stocks have now been lowered to $4.95 per trade for any quantity.

I've just looked at Trademonster but its account opening screens do not appear to allow non USA residents. How did you over come this?
 
malco3h said:
I have tested Interactive Brokers and find their site to be severely lacking. In the long run the savings are in the 10% to 20% range but you have limited abilities as regard to options trades. Also I find the web site often has trouble loading my account and makes you jump through hoops. This is my main problem with them as I cannot deal with site problems or extra hoops when I want to make a trade.
Click to expand...

I've used IB for over ten years. I NEVER use their web site to trade with. I use Trader Workstation (TWS). It's very powerful but takes a little getting use to. The trade navigator is interesting but not a substitute for OptionVue for the analysis piece. IB's execution is excellent and commissions are very reasonable. You get credit for executed trades. The modify/cancel fees are only a factor if you constantly change your orders.
 
Been with IB for many years. You need to calculate how many trades and how many contracts you will be trading to see if it is worth their fee structure.
 
Does anyone have any views on Tradestation? Fees look to be pretty competitive even in comparison to IB, and they also look like they have a far friendlier user interface for viewing options chains and for different types of positions i.e. call spreads etc.

Thanks,
bootsy
 
It may have already been said but it's not European or US options, rather European 'style or US 'style' options. As said US style can be exercised at any time but European style' only at expiry.
Also, as said, US contract is 100 share and UK contract is 1000. But be careful, sometimes this can be different (if there has been some sort of coporate action in the stock.
 
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