Degiro fees for US options

[bimby]

I'm looking for EU broker that provides access to US options and has lower fees than IB. This is to try out a few risk~ish algotrading strategies, so the money involved is small thus making IB's minimal transaction costs relatively high overhead.

Degiro lists following US options exchanges: CME, CBOE, CBOT, COMEX, NYMEX while I'm actually interested in stocks that are listed on NYSE and NASDAQ. Do any of the exchanges somehow provide access to NYSE & NASDAQ as well? They seem to be separate entities, but what do I know.

Degiro lists two different prices for accessing US stock exchanges: 2.50 EUR per year connectivity fee (e.g. in the fee calculator) and 5.00 EUR fee per month (listed in the Fee Schedule doc). Do both of them apply then? Should I expect 62.50 EUR fees per exchange per year? Are these fees taken on the first transaction or at the end of month/year? How many exchanges would NYSE & NASDAQ count - are these two exchanges (so 2 x 62.50 total costs) or do they count as a single market?

P.S. Their backlog for new accounts hasn't moved since the pandemic, I'm >9000 in line and might not get my account until autumn. The only other low-costs alternative to IB though seems to be ChoiceTrade which looks even shadier than Degiro. If there are any other suggestions/reviews - they are highly welcome!

 

[resjudicata]

@bimby If you’re specifically looking for a broker that’s cheap on the options front and you’re not a customer of Interactive Brokers yet you should probably have a look at some IB resellers.

IIRC TradeStation Global is an IB reseller that’s cheap for options.

 

[bimby]

@resjudicata I have account at IB. My problems with them are 1) high minimums per transaction; 2) weird requirements for trading without margin - stocks can't be bought & resold at the same day as you have to wait until money gets settled. TradeStation seems to have similar limitations - options there cost at least 1$ which isn't that competitive for algotrading.

To be clear, I would be all over IB if I were trading with 100k, but I'm not. And my strategies are risky enough without the margin.

It sucks that Americans have so many more cheap brokers to choose from. Tradier, Robinhood, Ameritrade.

 

[resjudicata]

@bimby In that case I don’t think IB resellers are allowed to sign you up as a customer.

 

[ryann22]

@bimby

And my strategies are risky enough without the margin.

I told you so, glad you figured that out before investing too much money.

 

[bimby]

@ryann22 Yeah, but the main risk is me not quite understanding how markets work and making incorrect assumptions. Yesterday it turned out I had completely wrong idea about market makers. Still got up 5%, but now I'm really tempted to take out initial investment (I'm 60% up) and play with paper money until I can quantify the risk.

 

[ryann22]

@bimby

the main risk is me not quite understanding how markets work

Yep, comparing it to a casino kind of gave it away.

 

[bimby]

@ryann22 How is it wrong though? Any trader has a chance to win, but only if another trader looses. The exchanges and market makers on the other hand get a steady income stream regardless of who wins or loses. It is a zero sum game with traders as a group losing the money.

 

[ryann22]

@bimby Market makers actually can (and do) lose money. Managing risk for a major market maker is a pretty intense and lucrative career.

Compare it to managing risk for a casino which is a pretty dull career, you just sit back and wait for the law of large numbers to kick in.

Exchanges too aren't casinos, they get a steady income stream because they provide a steady service, not because they gamble against their customers. They do not profit from losses.

You fell into the classic zero-sum game fallacy, markets just don't work that way because value isn't fixed.

 

[bimby]

@ryann22 Clearly you are not very familiar with casinos. They also have "pretty intense" challenges and managing risk for them isn't dull in any sense of this word. Most of their income does not come from "gambling against clients" either.

You fell into the classic zero-sum game fallacy, markets just don't work that way because value isn't fixed.

Well, if it isn't a zero-sum game, could you provide an example how the total output from this system could be greater than total income?

 

[ryann22]

@bimby Oh trust me, it's not even comparable to managing risk for Citadel/Jane Street/SIG/Goldman Sachs/... there's a reason their salaries are the way they are.

Well, if it isn't a zero-sum game, could you provide an example how the total output from this system could be greater than total income?

Easy, you own a bakery, the bakery creates value by transforming flour into expensive cakes and there you go, you the owner have more value than you started with.

Since non-economists usually don't accept these examples because of manual labour/buyers/whatever, it's easier to think of the opposite of creating value, destroying it.

Suppose you just bought a precious sculpture which is worth thousands, as soon as you get home you slip and drop it, completely shattering it. You just destroyed thousands of dollars of value. Is anybody better off because of it? Absolutely not.

So we know for sure that total value can decrease, by contradiction we can prove that it can also increase (otherwise total value could eventually go to zero) and that, as such, total value isn't a fixed-sum game.

 

[resjudicata]

@bimby I believe that the fees would charge up to 65€/year, 5€ month + 2.5*2 year.