ltloan[at]gmail.com wrote:

- quote -

You buy an option for 100 shares of a stock.
The commision is $7 + $1.25 (100 shares is one contract).

You own the one option.

You then either;

A) Sell the option (for a loss or gain) at the same commision schedule.
or
B) Exercise the option and pay the commission on 100 shares of the stock.

If you choose B, you then own the stock, and have a commission when you
sell. When you say "exercise and sell right away", this has limited use,
as in a very illiquid option that isn't even selling for its intrinsic
value. Usually, you'd exercise if your intent is to hold for the longer
term, or simply sell the option.

I hope this better answers your question, sorry if I wasn't clear.
JOE

Hi Joe,

I'm not quite clear about what you meant. My understanding is that:

- there is an option exercise/assignment fee
- an exercise entails purchase/sell of stocks, and therefore fees for
these stock trades

Is the final trade cost the sum of these fees? (w/o thinking about tax
effect) In other words, how do things go when you want to exercise an
option and (i) buy and resell right away the stocks, or (ii) buy and
hold the stocks? Trading the option is a possibility, and I assume the
regular option trading fee for this, if I can trade it close to
expiration. But here I'd like to estimate the cost of exercising an
option.

I've been building my portfolios with index funds. I'm also trying to
read as much as I can about stocks, options, corporate financial
analysis, ...and making guests on movement of selective stocks. I've
become more interested in options as I want to pick my stocks and start
with less money. I know about the risks, as well as the saying "you
gotta pay to play", so I'm learning now. I think I'll follow the market
a while before actually playing with it.

Loan.

On Dec 30, 8:11 am, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

ltloan[at]gmail.com wrote:

- quote -

Each broker will spell out their option commission fees.
The trade may cost $7 + $1.25 per contract. (this is an example from a
broker chosen at random.) This is your a+b.
An 'exercise' will usually incur a stock commission, as compared to
another option commission, but you would do this only if you're looking
to then hold the stock awhile. (or if it's so close to expiration that
the bid on your option doesn't show proper intrinsic value)

You started by saying you were a new investor. May I ask why you are
jumping right to options trading, quite risky, before building a
portfolio based on ETF and/or Index funds?
JOE

Thank you very much for the information and the links, they are very
useful to me. I would like to ask one more thing:

I am trying to figure out all the commission fees when trading options:

Assuming that:

a: option/stock fee per trade
b: option fee per contract
c: option exercise/assignment fee (per contract or per activity? I'm
not sure about this)

If I buy one call/put contract, and I want to exercise the option, buy
and resell the underlying stocks, is the commission fee a+b+c+2*a
or just a+b+c?

Thank you in advance for any answer, and have a happy new year!

On Dec 29, 5:57 pm, "Mark Freeland" <BnetOne...[at]sbcglobal.net> wrote:
- quote -


======================================= MODERATOR'S COMMENT:
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<wyu[at]talisys.com> wrote in message
news:1167429362.310756.129920[at]k21g2000cwa.googlegroups.com...

- quote -

See Oct 17 USA Today article [at]
http://www.usatoday.com/money/perfi/...e-trades_x.htm

As it points out, the cost to the broker is around $2, so even at $3,
SogoInvest is making money. More than that, however, is the pittance many
places pay for cash. (Despite what the article says about Schwab paying
good rates, this year they moved most of their customers from a fair
yielding MMF to a lower paying Schwab bank account.)

The article also points out that there are various ways to get free trades,
including Zecco.com. (Another site is critical of the ads that you have to
endure at Zecco.)

There's also the matter of quality of execution - get a couple of cents
price improvement and that can more than make up for a few bucks difference
in commission.

Here's a BusinessWeek article from July, discussing these differences and
more. If you click on the SlideShow, you'll get the price improvement
statistics (and more) for 15 different brokerages.
http://www.businessweek.com/magazine...1/b3995118.htm

Then there is the matter of the IRA. Many brokerages charge an annual
maintenance fee; several others do not. SogoInvest doesn't even offer an
IRA account yet! https://www.sogoinvest.com/accountse...counttype.aspx

Judging from the slides (and the fact that it has no IRA maintenance fees),
Firstrade might be something to look at. Not being an options trader, I
can't comment too much on that aspect (beyond observing that you can trade
options there).

- quote -

Mark Freeland
BnetOnewsX[at]sbcglobal.net

529's are run by the states so you will not be able to find anybody who
can offer you stock trading under a 529.

Sharebuilder is cheap but they really don't do trading. If you note the
exact verbage, it says "buy stocks for $4 or less with an automatic
investment program". Their regular market orders cost $11.95-$15.95.
This broker is designed more for periodic investments into stocks and
etfs -- much like how you would put money into mutual funds every
month.

Now as for sogoinvest.com, I can't see the catch here and I can't
figure out why they're so cheap. They have their own clearing house so
any trades that happen inside themselves don't incur standard
transaction fees. How much volume they have and if they're losing money
by offering trades for $3? I don't know but it sure sounds tempting.


ltloan[at]gmail.com wrote:
- quote -

Hi all,

I am fairly new in stock trading. I would like to know if I can
buy/sell stocks within a tax-friendly account like IRA or 529? If I
can, do you know of any good brokerage service, i.e. one that is cheap,
offer options, and has decent option trading activities? I found
ShareBuilder for $4/stock trade, SogoInvest for $3. These two seem the
cheapiest so far. Are they good?

I would greatly appreciate any insight. Thank you!

Loan.