Equities: New extremes and a challenging opportunity set
Discover insights on the future of equity markets in Q1 2024 and navigate the potential recession with strategic investment choices.
Summary: Explore the significant advantages of our Updated Pricing Structure in our latest analysis, 'Trading evolved: unveiling new opportunities.' This article examines the impact of our new commission tariffs, showing substantial cost reductions for various account types. We provide concrete examples demonstrating how these changes make advanced trading strategies more affordable and practical, especially for Classic, Platinum, and VIP account holders. Our revised pricing model is designed to enhance trading profitability and enable a wider range of strategies, reflecting our commitment to an efficient and accessible trading environment for all clients. Read on to understand how these essential changes can benefit your trading approach and outcomes.
Our new commission tariff structure brings a wave of cost savings to options traders. Under this unified pricing model, Classic, Platinum, and VIP account holders enjoy significant reductions in trading costs. Stock options are now 33% cheaper for Classic accounts and 50% less for Platinum accounts, while VIP clients see a decrease from 85 cents to 75 cents per contract. Contract options (options on indices) offer even greater savings, with a drop from USD 6 to USD 2 or USD 3 to USD 1 per contract for Classic and Platinum accounts—a 66.67% reduction. Futures options are now priced at USD 3 for Classic, USD 2 for Platinum, and USD 1 for VIP accounts, a substantial decrease from the previous tariffs. This new pricing structure providing a cost-effective trading environment for our clients. See full specifications here.
What does this mean to you? Let's have a look at the implications of the new tariffs with a few examples of specific options strategies. Let's first have a look at a put (or call) vertical debit spread on a stock, which is a very common strategy and involves 2 legs (for example a put spread which consists of 1 bought put and 1 sold put).
Old pricing structure (Classic account)
Cost per leg to enter: USD 3
Total cost to enter the trade (2 Legs): 2 legs × USD 3/leg = USD 6
Cost per option/share for entry: USD 6 / 100 shares = USD 0.06 per share
Cost to exit the trade: Assuming similar costs, USD 0.06 per share
New pricing structure (Classic account)
Cost per leg to enter: USD 2
Total cost to enter the trade (2 Legs): 2 legs × USD 2/leg = USD 4
Cost per option/share for entry: USD 4 / 100 shares = USD 0.04 per share
Cost to exit the trade: Assuming similar costs, USD 0.04 per share
Comparative analysis and summary
Entry cost reduction per share: USD 0.06 (old) - USD 0.04 (new) = USD 0.02 savings per share
Exit cost reduction per share: Similarly, USD 0.02 savings per share when closing the trade
Total savings for round-trip trade: USD 0.04 per share (entry and exit combined)
Now assume you would buy 10 of such debit spreads on the QQQs (the Nasdaq 100 ETF), and later sell them again (For example after a 50% take profit). Then, the price of one debit spread would, in the given example, cost USD 1.79 (based on an actual random strategy).
Now let's have a look at a different example where a holder of a Platinum account sells an iron condor on the SPX-index:
Old pricing structure
Cost to enter the trade: USD 3 per contract per leg × 4 legs = USD 12
Cost to exit the trade: Same as entry, USD 12
Total cost for a single contract iron condor: USD 12 (entry) + USD 12 (exit) = USD 24
New pricing structure
Cost to enter the trade: USD 1 per contract per leg × 4 legs = USD 4
Cost to exit the trade: Same as entry, USD 4
Total cost for a single contract iron condor: USD 4 (entry) + USD 4 (exit) = USD 8
In this example, the credit earned per contract is USD 9.10. Comparing the costs under the old and new pricing, a Platinum account holder now pays USD 16 less in total to enter and exit a single contract Iron Condor, significantly enhancing the profitability of such trades.
For a Platinum account a lot-size of 10 contracts would not be uncommon and savings on a single trade (of 10 contracts) quickly build up to considerable savings of USD 160 in the above example.
If we take the same iron condor example from above and look at the impact for a VIP account, we get the following outcome:
Old pricing structure (VIP account)
Cost to enter the trade: USD 1.50 per contract per leg × 4 legs = USD 6
Cost to exit the trade: Same as entry, USD 6
Total cost for a single contract iron condor: USD 6 (entry) + USD 6 (exit) = USD 12
New pricing structure (VIP account)
Cost to enter the trade: USD 0.75 per contract per leg × 4 legs = USD 3
Cost to exit the trade: Same as entry, USD 3
Total cost for a single contract iron condor: USD 3 (entry) + USD 3 (exit) = USD 6
Again, we see a considerable price/commission reduction of 50%!
With the above examples fresh in our minds, these are the key advantages for you as a trader:
Direct cost savings: you'll see a noticeable reduction in your trading costs, making your investments more efficient and cost-effective.
Complex strategies are made more accessible: advanced strategies like Iron Condors and Broken Wing Butterflies (and many other multi-leg strategies) are now within easier reach, thanks to lower commission fees. This opens a new realm of trading opportunities that were previously more expensive.
Boosted profitability: with reduced costs, your profitability could see a significant boost, especially in strategies involving frequent trades or multiple contracts.
Diverse trading tactics: the affordability to execute a variety of strategies allows you to diversify your trading approach, potentially leading to better risk management and improved returns.
Empowering smaller accounts: if you’re working with a smaller account, these reduced rates make options trading more accessible, allowing you to participate more actively in the market.
Increased liquidity opportunities: lower transaction costs could encourage higher trading volumes, potentially resulting in better liquidity for certain options.
Enhanced learning curve: the ability to try different strategies without high commission costs promotes continuous learning and skill development, sharpening your trading acumen.
Advantage for active traders: as an active trader, you'll find these price reductions particularly beneficial, as they allow you to adjust positions frequently at a lower cost.
Stimulating market innovation: the new pricing may lead to novel trading strategies and methods, as traders like yourself find creative ways to maximize returns under this cost structure.
Improved trading experience: overall, these changes are likely to enhance your satisfaction and confidence in your trading platform, knowing that it supports more cost-effective trading strategies.
In Conclusion: A New Era of Trading Efficiency
The introduction of our new pricing structure isn't just a change in numbers; it marks the beginning of a new era in your options trading. By significantly reducing costs, we're not only enhancing the profitability of your trades but also opening the door to a wider array of strategies, especially for those previously deterred by high commission fees. Whether you're a seasoned trader or just starting out, the benefits are clear: more flexibility, increased potential for profit, and a deeper engagement with the market. This change reflects our commitment to your trading success, offering a platform where efficiency and opportunity converge. Embrace this shift as a stepping stone to diversifying your portfolio and realizing your trading aspirations with greater financial freedom.
What happened to the future?
What happened to the future?
Mitigate risks by emphasizing high-quality sovereign bonds and exploring potential opportunities in corporate bonds.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.