8 Ways to Reduce Your Commission Costs
Ken Trester, October 8, 2009
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#4 Get a Quantity Discount
As in any other business, the more options you buy or sell, the lower the price that you will pay for each option. Using this principle, attempt to move into strategies where you are buying and selling a larger quantity of options. This will reduce the commission cost per option contract (one options contract controls 100 shares of the underlying stock), significantly in many cases. The option player who comes into the game with a small amount of capital and only buys or sells one contract is taking on huge commissions. In order to reduce that cost, buy and sell in quantity, and pay a low minimum.
I strongly suggest that you always work with at least five options when you move in and out of positions. This way you'll reduce commission costs down to one-fifth or less per option. The ideal number is 10 -- if you can get to a working level of 10 options for each strategy, then you will have attained a nominal commission cost level.
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