MB Trading Actively Screening New Customers?

I do my best to maintain accounts with a wide variety of brokers, particularly with those who are partial to options traders, in an effort to get a sense of how various tools and platforms are evolving at the broker level, keep up to date on educational offerings, etc.

In the last year or two, I have opened new accounts at tradeMONSTER and OptionsHouse and have had very positive experiences with both brokers. One broker that I have been meaning to try for awhile is MB Trading, which has been a top performer in the Barron’s online broker rankings (with additional details here) for the past few years.

Much to my surprise, when I heard back from MB Trading today it was to request more details related to my employment and the like. Keeping in mind that any broker new account application for options and futures trading has a comprehensive list of questions related to employment, assets, trading experience, etc., but for the first time out of perhaps 15-20 new account applications I discovered a broker that was intent on conducting additional due diligence over and above what is covered by the standard application. I have to assume this development is specific to MB Trading and I applaud this effort. It is always nice to know that a place where I put my money uses some discretion in the money they accept from others.
 
[Note that Theresa Carey, who authored the Barron’s online broker rankings, also maintains an excellent blog, Investor Brain, where she discusses the latest developments in the online broker space, in terms of functionality and features, as well as industry-level issues.]

Related posts:

• Good Luck Getting a Mortgage Here…
• Trade King’s Option Screening Tools

Disclosure(s): none

TradeKing’s Options Screening Tools

When TradeKing launched their stock and options brokerage back in December 2005, I was one of the first to sign on. The promise was an inexpensive commission structure, some innovative tools and an emphasis on integrating social media themes into the online experience. In the almost four years since it was launched, TradeKing still differentiates their services along the original three themes and has made increasingly larger overtures to options traders, including a strong educational component.

I have always had a good experience with TradeKing, but I realized today that my account was now growing some moss from extended neglect on my part. Frankly, there have been two relatively basic issues that have kept me at arm’s length over the past few years:

1. The biggest issue I have is the three hour maximum login period before the website automatically logs me off. As an active trader, unless I can leave my browser window open for a full trading session without having to worry about being timed out just before I want to make an important trade, then I am going to be an intermittent customer at best.
   
   
2. A related issue is the TradeKing login process, which is not keystroke-driven, but mouse-based. This is undoubtedly attractive for the security conscious trader, but not for those who wish to automate the login process and/or never be automatically logged off in the first place.

For the record, I have no problem with enhanced security features, but it would be nice if customers could elect the level of security that is appropriate for their account.

In any event, in surfing around TradeKing, I could not help but notice that there is a liberal sprinkling of iVolatility tools, notably the Volatility Charts; Options Calculator; Probability Calculator; Options Scanner; and Options Strategy Scanner.

Tomorrow being the last trading day for equity options prior to expiration, I thought it might be interesting to use the TradeKing Advanced Options Scanner to give me some trading ideas. Specifically, I decided to look for one day buy-write (i.e., buy a stock and simultaneously sell a covered call) trades, using the scanner to identify near-the-money October calls with implied volatilities of 80 or more.

The top chart below shows the simple scan parameters I used and the bottom chart shows the results of that scan. Looking at out-of-the-money (OTM) calls, I see that Cubist Pharmaceuticals (CBST), which reported earnings after the bell, has October 20s for sale at 0.50, which represents a 2.51% return from today’s close. In fact, all the OTM calls on this list are from companies which reported after the market close today or are scheduled to report results tomorrow morning. Still, the Options Scanner runs in real time and may be able to identify a high potential buy-write opportunity after the open.

In sum, The TradeKing-iVolatility partnership makes some interesting tools available to TradeKing account holders. Going forward, I will be looking to incorporate more TradeKing tools and graphics into the blog.

[Edit: I note that one reader wondered whether this post was some sort of endorsement for TradeKing. On the contrary, my intent is to rotate through some of the main options brokers (thinkorswim, optionsXpress, OptionsHouse and TradeMonster) in order to highlight what I consider to be some of the better features, etc. and give people a feel for some of what is available from each of these brokers. That being said, TradeKing does advertise on the blog from time to time, but so also do all the other brokers listed above, save thinkorswim.]

For related posts on these subjects, readers are encouraged to check out:

• The Value of Selling Covered Calls
• Graphical Comparison of Performance of PutWrite and BuyWrite Indices
• More on PUT Returns
• BuyWrite Index as a Timing Tool?
  

[source: TradeKing]

Good Luck Getting a Mortgage Here…

I don't talk much about my trading and investing background, but suffice it to say that I have been an active investor for 25 years, have traded all sorts of options for 10 years, have accounts with about a dozen financial institutions, some of which carry what I consider to be significant balances, etc. On top of that, the options commissions alone that I generate are quite substantial.

So...just for the heck of it, I decided to open an account with Bank of America and see how well their 30 free trades a month promotion works and whether it makes sense to move a large chunk of money there and make them a part of the network of institutions with which I place most of my trades.

On their options application BofA asks the usual questions about the number of years trading options, number of trades per year, average trade size, types of trades, etc. Given the substantial history and volume I have in this area, including writing naked options on equities and indices, I was surprised that it had taken several weeks for them to add options authority to an account that I opened and funded at the beginning of the month. Finally, I get a call from them today. I returned the call and their rep proudly informed me that I have been approved for Level 3 options trading – which is their equivalent of an investor with training wheels: no authority to write uncovered puts and calls for equities, not to mention index options. I just laughed. I love thinkorswim and optionsXpress. I also think TradeKing does an excellent job with options, especially considering their pricing. No doubt those three brokers will continue to get 95+% of my options business. Fortunately, I won't have to worry about how good the options executions are at Bank of America. What a joke...

[For those who are wondering, I did not reference the blog, nor ask the person on the other end how he would go about evaluating a fair price for a VIX calendar spread when the VIX is in contango.]

Disclaimer: I have no position in BAC at the moment, but keep in mind that this is the same company that invested $2 billion in Countrywide Financial when the common stock of CFC was trading at about 26 (it is now at 9)