The principle of least aggravation

I've been trading options for almost 4 years now, with intermittent success. I think I've finally found a winning strategy, thanks to Dan Sheridan and his team, from whom I learned not to fear "adjustments" and other valuable skills.

As I learned, I came to be interested in slightly nonstandard trades and to understand what features are desirable in a brokerage. I've tried four different brokerages now, and three have what I consider to be fatal flaws (for my purposes, anyway), so that leaves me with the fourth, which I'll discuss at the end of this post.

I spent 2+ years trading via OptionsXpress. There's a lot to like about this site: the UI is in many ways very nice, automatically doing things for you that should be automated (like adjusting the expiration dates on a butterfly spread to match when you change one of the wings).

Its fatal flaw, though, is being too inflexible about not-quite-standard trades, like the 1-4-3 butterfly I mentioned here last year. It also has a very funny idea of how to combine trades; try buying two nearby butterflies and watch what happens. It breaks them apart and recombines them into 2 call spreads, a butterfly, and a condor. Sheesh:

I've recently been trying OptionsHouse ... the low-price leader. They do get the job done, but ...

• They have a clunky UI, with none of the nice features of the OX website. You have to do every step by hand, including assembling the sale of a spread that you bought.
• They have a strange way of handling not-quite-even butterflies -- they make them 2 spreads and apparently charge margin for each! For example, I tried to put in a butterfly 850-910-950 and got a "you don't have enough margin" message. I put in a help request and this '2 spread' bit was explained ... I widened the spread to 850-910-960, still a debit spread ... and the system accepts it.

These 2 issues I might have lived with, but this week I tried to put in a calendar on the new extended weeklies -- you sell the 8-day-out one and buy the 15-day-out one. This is a debit spread with limited risk, but I got this red warning text as if I were trying to sell naked calls. I called their help line and got some unhelpful explanation. I suggested this might be a bug in their system, and the guy said no, that's what they intended ... OK, they're going to have to live without me ...

I've just spent a couple of months with Interactive Brokers. I had high hopes ...

There is a lot to like:

• Terrific execution, even (especially?) of open-outcry index options like RUT and SPX
• The best security of any brokerage or bank I've seen, with a brilliantly designed two-factor authentication scheme

But ...

The UI is baffling. Actually they have at least 2 UIs and possibly more, depending on how you count. There is Web Trader, via which I entered my first butterfly spread. I then launched their "Trader Workstation" .. and it's a bunch of Java UI code flying in very loose formation.

What do I mean by baffling? I thought I was buying March 2013 expiration options ... there was a web menu that had 'Mar 2013' as one of the items but then some dates below that, presumably weeklies. I chose 'Mar 2013' and thought I was all good.

I found out two days later that I actually bought a spread on the March 1 expiration extended weeklies without realizing it! This is ... the second time I've made this mistake on their site, and two strikes is out. 

I was going to insert a screenshot of the Trader Workstation menu ... but the first time I tried to run the Linux version:

The brilliantly designed two-factor authentication scheme is

missing one of the factors on Linux ...

So that leaves me consolidating with ... drum roll please ... ThinkOrSwim. To be abbreviated TOS below ...

I have only traded intermittently with TOS, trying other brokerages when I was experimenting with the 1-4-3 trade ... $179.95 commissions for a +10/-40/+30 trade ... $24.50 on OptionsHouse.

But:

• I got a break on the commissions through Dan Sheridan's company, and I'm no longer focusing on that 80-contract trade but a butterfly which takes only 40
• Other than the commissions, I realized earlier today that I've never had a single other issue with TOS!

They're not as good at security as Interactive Brokers, but they do have a standalone program (runs on Windows, Mac, Linux) that is easier to secure than a browser-based setup. Its UI is complex but usable, and there are videos posted on its site that tell how to do anything I ever wanted to do.

So: I'm going to stop messing around with brokerages and just use TOS to make money ... although I hear Fidelity's site is nice ... :-)