I've been trading equity options for 20 years and will now move to futures options as well - the E-mini S&P to be precise... I like vertical credit spreads. I especially like how the expiration of the spread does not create an exit commission. Thus, cost is only on entry. My question: Is that also true in the futures market? If my options expire, do I only get charged the first half of the round turn? Thanks!
Depending on the broker. Some brokers charges you 2x commission (open & close) when you initiate a short options position on a futures contract. They want their commission just in case you let the option expire. If you brought back the short option, no additional commission is charged.
Nothing wrong with being a newb and asking a newb question. If your credit spread is otm it will expire worthless with no further transaction costs. Surely someone with 20 years experience would know this.....
As I said, my experience is in equities, not futures. Everything in futures refers to "round turn" and no explanation is given for that applying or not to options on futures contracts. I became impatient and asked another professional I know about this. He trades exclusively futures options for an institution and is very accomplished. He didn't know. Turns out he has never let an option expire. So I called my futures broker. He provided the answer and it's not as simple as it is with equities: The commission structure has to be determined upfront and set on a client by client basis. Some clients choose to have the full round turn charged on the front end. Others, who may be selling premium and want the option to expire worthless, will request "half and half" commission structure. This way, a strategy that assumes entry only is not paying for a transaction that does not happen.