8 Ways to Reduce Your Commission Costs

In almost any sport, there are admission fees and expenses that must be paid to play the game. In the options game, these expenses are high. In fact, the commission costs are one of the major criticisms of trading.

A moderately active options portfolio will generate from 10% to 30% of the value of that portfolio in the form of commissions per year. In other words, if you have a $10,000 options portfolio, at the end of your first year of trading, you may incur commission costs running from $1,000 to $3,000. So, if you do not earn more than $1,000 in that account, you lose.

However, there are ways to avoid and reduce high commission costs, and means of instituting defenses to protect yourself against them.

Next: Avoid Excessive Trading