Options Trading Tutorial

Why does my online brokerage charge a premium for options trading ?

Thye charge $0.75/contract plus the $9.99 commission fee. Why the per contract charge ? Are they trying to discourage options trading ? Are they implying that options trading is more profitable than stocks ? I know the writer of the contract deserves a premium as incentive to write the option, but it appears that my brokerage isn't involved with writing them, some random individual in the market is.

Public Comments

1. Think of it this way, you are buying at the same time you are selling. You're getting quite a bargain for an extra $.75.
2. The $imple answer is ....because they can. Other firms that trade options have similar charges. You will only see these extra fees come down when there is more competition in the field. Similar to the "postage and handling" charge many firms have to mail you a confirmation of a trade. Just a way of padding their bottom line (at your expense).
3. That $.75 charge is a pass through charge, that is what your on-line broker is charged for your order $1.50 per turn (a buy and a sell) is a good rate... If you're upset about that try this... the reason you don't see a charge for trading stock is because your on-line broker collects a fee from the market center they send the order to for execution, in addition to your $9.99 fee. Cha ching!!!!