I am a US citizen but I would like to trade options on BMO. What online brokerage firms firms do people use to trade options in CAD? I have been looking at Interactive Brokers as a possibility. Thanks in advance.
I hate the say this but at the end of the day, you gotta ask yourself “What am I getting for my $3.99 trades”? I know it sucks to pay some arsehole broker $85 or $90 a trade but you do get MUCH better service. Have you guys called into some of these discount places recently? I mean I know people have to start somewhere but if you’re a more sophisticated investor who deals in options, wouldn’t you want to deal directly with an Advisor who can, at the very least, provide you with some suggestions and guidance. It may not be right but it might provoke you to think about your trades some more. What can a discount place do “Uh sorry sir but I’m really trying hard to become a successful Venture Capitalist or H-Fund Manager, but for now, I’m doing this trading job that lies on the fringes of investment management and I really cannot provide advice”. I had this talk with several of my buddies who are Advisors and believe me, I grilled THEM as to why I shoudl fork over $90 every time I hit the panick button with them vs. the $3.99 option and they do come up with some compelling reasons beyond the traditional brokerage sales propaganda. Willy
“wouldn’t you want to deal directly with an Advisor who can, at the very least, provide you with some suggestions and guidance” Sure - I want the guidance of someone who answers the phone. My kids probably know more than that guy.
Joey, I’m not saying EVERY Advisor is worth the value of their ridiculously lavish websites or silly business cards but I’m saying they do have greater ability to access information that an options trader might find useful. Willy
While I agree with your points the main reason I am interested in trading BMO options to hedge a family members position. BMO has been buying banks in the midwest and has been paying in stock and my family member received a significant (relative) position. The cost basis is essentially 0 so selling all of the position is not an option so i want to do a zero cost collar for them. they have been talking to brokers and are looking at doing an OTC transaction at levels that dont reflect the option prices i see on my bbg (meaning the suggestion was to do a collar for 85% and 105% and have this be costless). i am trying to figure out what costs would be involved to do it on your own. thanks.
You do know that the “costless” part of that collar is quite the misnomer? You might want to think about some other solutions to the problem. Unless you think that your family member is going to die soon and you get the stepped up basis through the estate, the options solution just causes you problems. You’ve sold a bunch of calls and the stock goes to 150, then what? Your costless collar is going to really irritate your family member when he finds out that he either needs to come up with a bunch of cash or have to pay the tax man anyway. Some other things to think about - a) Gift shares to people in lower tax brackets and let them deal with low basis. b) Fund up a charitable remainder trust. c) Run up a tax bill in whatever way and then reduce it by gifting the stocks to charity d) Find an exchange fund you like e) Do like-kind transactions with a buddy. Dollars to donuts there are like-kind exchange websites. f) If the position is big enough and the rest of the stars are aligned, do a swap.
Joey, Thanks for the response. 1st the person is older, mid 80s and spouse is in the 80s as well. 2nd we did look into all of the options you suggested ex f. The best option the accountant thought was to collar and slowly sell securities. BMO has a nice div yld so income would be covered. the “costless” part is a misnomer but when i looked at the pricing information provided it didnt match what was being done in the market. anyway, thanks for the response.
So you are looking for the stepped-up basis (mid-80’s thing). Sounds okay to me.