I am new to the site and am starting a system based on Condors. Is there a way to enter multiple legs of the trade? My OptionsXpress account allows entering all 4 legs at once to
1) reduce fees
2) request a better net credit for the trade
3) ensure all 4 legs are traded
My TD Ameritrade account allows spread trades (2 legs) at a time which somewhat reduces fees, but still requires 2 trades to make the condor.
In Collective2, if I have to enter 4 separate trades instead of 2 spreads or 1 condor
1) I would incur 4x the fees
2) I might not get as good a net credit for the whole trade
3) I might not get filled on one of legs
For example, in a less liquid stock, the natural bid/ask for the 4 legs combined may be .80/1.50, and I request a net credit "in the spread", like .1.00 instead of .80, and I usually get it. That plus the lower fee makes a big difference on profitability.
4 separate trades would punish AutoTraders from getting near the profit on a trade that I can get by manually entering the trades through an online broker. In the above bid/ask example, a 2 contract condor via C2 would have 4 trades. The fees at OptionsXpress would be $60, and trading 4 legs separately you pay market per leg and only get $160 before fees, or net profit of $80 after fees.
If I do it manually and get a better price, the fee is $15, and a trade profit of $200 means a net profit of $185. Big difference from $90 profit.
I was editing the numbers and made a couple of typos.
IT SHOULD BE:
The fees at OptionsXpress would be $60, and trading 4 legs separately you pay market per leg and only get $160 before fees, or net profit of $100 after fees.
If I do it manually and get a better price, the fee is $15, and a trade profit of $200 means a net profit of $185. Big difference from $100 profit.
Hi Scott,
I am also an option trader and have the same problem here on C2. It would be very useful to be able to enter at least two-leg spreads. That’s a very good point about squeezing the bid-ask spread as well as sometimes getting lower broker fees. Another important use of spread orders is that you can put in on at limit and go away, instead of sitting glued to the screen waiting for the right moment to go in one leg at a time.
I would qualify the wish-list with the statement “any kind of spread order that OX can accept”, which would also include rolling a contract forward: e.g. [STC X Feb 10 call] + [BTO Jun 10 call] as one trade entry.
However, I suspect that in the interest of supporting as many brokers as possible, C2 will not be able to offer all the multi-leg combinations. Nevertheless, two-leg spreads and roll-overs are very common and I hope those at least are doable 
Hi, Dean:
Yes, this has been a common request. To be honest, it’s very complicated because every broker (and every broker API) handles multi-legged trades differently. Of course it’s relatively trivial to allow a system developer to enter a “spread” in C2 – but the problem is how to make sure that spread is effectively handled at all brokers that we support, in such a way that the results at C2 match the results at the brokers and vice-versa. (Imagine a scenario where C2 allows a spread to be purchased at an effective limit, but a subscriber’s broker where he AutoTrades does not have native spread capability, and thus the subscriber will be filled at market… there will be a lot of angry customer service emails shooting back and forth…)
This is one of those features that the programmer in me would love to tackle, but the businessman can’t quite commit to. The business upside is limited, the technical and customer-service downside large, the programming resources required substantial. I think it’s best to be honest about feature requests by users: some can be tackled right away, some eventually, and some – like this – perhaps not in the near term.
Let me noodle it a bit. Perhaps just allowing the easier entry of spread trades on C2 might solve part of the problem… even if the trades ultimately are executed at brokers as separate legs.
Thanks for the explanation and for noodling Yes I can see how there may be all sorts of tricky complications popping up which may not be worth all the effort.
But two leg spreads are so common, as is rolling forward… doesn’t every options broker offer these as a single order? I would expect so but then I don’t really know - I only have experience with OX with whom I have been trading for 5 years. They have extensive order combinations which they process well.
Dean.
I have never been into complex options (like condor or butterfly). Is there a fundamental edge you think bring to this where using simpler methods wuold work? Seems like you are basically getting slammed with commissions, extra bid/ask and/or slippage, not to mention complexity, doing this…
Hi Index,
Sure, if you can achieve your desired risk/reward curve (not forgetting the potential effect of implied volatility changes as well!) with something simpler than a condor then a condor is too complex (and too expensive) for the task.
I don’t use anything more complex than a spread order, but that’s mainly because either I require nothing more, or my ideal risk curve cannot be obtained by entering a single compound order even at OX. I agree with you on the complexity point, however there is some complexity necessary if you want an overall risk/reward balance which is more than just long or short or covered-call-style.
Having said that, I do try to keep the complexity to the minimum necessary. Occam’s Razor.
If one does nevertheless want to end up with a Condor or Butterfly, the advantage of placing a single compound order is precisely to save on commissions and bid/ask, as well as the ability to place the whole order at limit. As you point out, these costs are very significant with options.
A good broker will usually be able to get you such a position with an overall price significantly better than if you had entered into the position one leg at a time as long as there is enough liquidity in the chosen options. And you cannot set a limit price if legging. They will also usually charge less for the combined order than for separate orders for each leg.
Dean.
