chickensevil
Active Member
please read carefully and digest the logic for the stat in the SEC letter linki gave above and you will find your solution on how to easily compare all in cost, the first time I read it, it took me 20-30 minutes to really let the steps outlined in that letter sink in where the light bulb went off and then it made perfect sense.
Seems like that is a feature of trading on IEX vice trading on some other exchange. So perhaps you can help clear something up for me with how the market actually works. Because assuming that IB only has access to IEX and not the other exchanges then that seems limited in and of itself, doesn't it? Options house and many others trade across a bunch of exchanges. I think mine has like 10 of them that they can trade on. You can specify a certain exchange if you want or just let the platform decide for you. Sadly they don't trade on IEX though.
So for already thinnly traded options and now you are restricting yourself to just one (albiet very large) exchange and that seems like it could hurt you just as much in the pricing. Looking across the different exchanges in real time on options house and there can be up to a 5 cent or more spread from the cheapest exchange to the mist expensive at any given moment. Which just trading one contract is the difference of 5$ which for me is basically paying out the commission fee.
I haven't had the time to really research any of the other exchanges other than AMEX and IEX but that seems like a decent flaw. Does IEX cross fill against the other exchanges if there are no compatible orders on their exchange? If so, then what are you actually saving in that instance since at some point it would have to negotiate with the "rigged" AMEX exchange which means you are still going to get shafted on the "best" price, right? That or they don't play together at all which means you could potentially have an order for 6.00 that never gets filled going to IEX but see AMEX drop to that price (or lower). Feel free to steer me straight on this because I am actually interested in some of the deeper workings of the different exchanges and such but it seems difficult to find good information on it.