Calculating fees when buying options and how to exercise them before expiry? - Aussie Stock Forums

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  1. #1

    Default Calculating fees when buying options and how to exercise them before expiry?


    Anyone know how to calc fees in buying options?

    According to Etrade it is:
    AU$0.143 per Equity Option
    AU$0.495 per Index Option

    But how do I know it is an index or equity option?

    Would TTEO or SSNO be equity options?

    If I buy 10K worth of TTEO ($10,000 / 0.015 = 666,666 options)
    Does it mean I have the fees = 666,666 x 0.143 = $95,333??????
    Or would it be calc per 'bundle'?

    And the calc for exercising them is:
    AU$0.055 multiplied by the number of contracts exercised
    i.e. 0.055 x 666,666 = $36,666 ???

    And, how do I exercise them?
    My want is: to convert options into heads and gain the in the money profit ..

    But it seems that my money would be eaten away by the fees ...
    Anyone know how to calc fees associated with options? and how to exercise and gain from options?

    Thank you

  2. #2

    Default Re: Calculating fees when buying options and how to exercise them before expiry?


    U remind me of me at the start of the year when I first started trading options at the start of the year....

    Same questions....

    Firstly regarding those fees, you have to pay 2 lots of fees. The first is brokerage and the second is called ASX clear fees. The brokerage for options for you on e*trade is the exact same as shares which e*trade calls standard brokerage. So if you entered into a $20,000 contract then you would pay $29.95 in brokerage.

    Now for the ASX clear fees. Which you brought up in your thread. They aren't that much so i wouldn't stress. Plus when you start dealing with bigger piles of cash you hardly notice them.(not to mention the little "kick" you get when you get bumped up into the next fee bracket for a healthy gain.) Simply put it is a fee of $0.143 for every 100 options (1 contract) you buy. I went through my e-mails and on my last trade I entered into 305 contracts (30500 options) on a single trade and chalked up $43.62 ASX clear fee. Which you will find is (305 x 0.143 ).

    So if you entered into a $20,000 agreement on 30500 shares/options you would pay $29.95 brokerage + $43.62 ASX clear fees or $73.56 total. I don't know how you view this exactly but to compare 20k to $70 you hardly notice them..... not to mention that you claim them back at tax time.

    Anyway if you look up the definition of a contract you will find that it is 100 options purchased, So if you
    brought 1 contract say on RIO then you would have the rights to 100 shares. I don't know how e-trade works but with comsec you can only buy contracts (100 units ) at a time. ( don't worry m8 you'll be talking contracts in no time)

    Exercise options eh? U must know something that everyone else doesn't. Roughly 65% of all contracts were 'closed out' last year. Only about 15% were exercised. I strongly recommend that you go to the asx website and read the pds regarding options before you trade. It is a really great read. Mainly because you MUST understand what 'closing out' is. At the start of the year I thought that all options were exercised but after reading the ASX options pds I now close out my positions. BECAUSE IT IS MUCH MORE PROFITABLE, AGREE ALL?

    I've never exercised a option contract.

    Feel free to PM me if you have any more questions because I am more than happy to talk OPTIONS till kingdom come. As you can probably tell by this long reply.
    Last edited by cbc1; 14th-December-2012 at 11:22 PM.

  3. #3

    Default Re: Calculating fees when buying options and how to exercise them before expiry?

    TTEO and SSNO are listed Company Options - ie Issued by the company, rather than Equity Options like say BHPN59.

    They pretty much trade just like any other stock, there are no extra fees when you buy/sell/exercise them.

    You simply instruct your broker to exercise those options on your behalf, and they'll fill out the forms etc and send it to the registry. Cash will be debited from your account, and you'll get your stock once its all processed (usually with an Appendix 3B)

    These company oppies are pretty easy in that you just need to calc Stock Price - Oppie Price - Exercise price = Profit/Loss.

    WARNING: TTEO and SSNO are expiring 31st Dec, which means a whole heap of them will get exerised and allotted together. If you buy the option now and exercise because the share price is currently "high", keep in mind that once a few hundred million options are turned into shares that'll be a LOT of selling pressure.
    I believe effort to be a finite resource. Something to be used only when there are no other options available.

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