Options Zero-commission

[tar]

Zero commission from choicetrade up to 500 contracts on the expiration week , what is this ?

http://www.choicetrade.com/messages/zerocomm/

 

[GTS]

How bizarre. Their making their money somehow, prob as a market maker when the spreads tighten the final week.

 

[Seedman]

I am the CMO at ChoiceTrade. With the Zero Commission Options program we have found that serious option traders appreciate this program. This program does not lose money because when one looks at the incremental margin across all trades, the program works pretty well.

 

[GTS]

No doubt they appreciate it. When you say program does not lose money do you mean the company? And what does the incremental margin influence of profitability? Thanks.

 

[Seedman]

Yes, I mean the company. There are many profit centers within an online brokerage firm. Over the ten years the company has been around, competition has driven margins down across the board. In the end, you have to consider trading activity, acquisition costs, margin interest profit, overhead and cost of clearing. ChoiceTrade competes by slimming the margins for basic active trading capability across multiple platforms with an emphasis on seeking customers who are a little more experienced. It comes down to catering to higher-volume traders. It's Zero-commission option program has been a success with this crowd.