You pay roughly 10k more taxes for 40k more income so the marginal tax rate is about 25%. So for 40k rather high risk options income you give 25% to the state. (Correct me if I’m wrong)
I think most people on this forum think rational and an annualized return of 40% is rather delusional not because of jealousy but there is now way you just invented your private money printing machine. Im open for discussions if you are too .
EDIT: Of course I’m prone for faults like any human being so I might be talking bullshit but that’s just how I think when someone is writing about annualized profits of 40% with options like it was some pocket change money.
This thread is one day old, 50 messages and two third of it is drama without any link to the original topic.
That’s a good moment to remind everybody of the new Moderation Policy.
This kind of cheap shot is not needed here.
You’re not going to make a lot of friends as a newcomer with this kind of approach either.
Back to the topic:
I work also in the finance industry and I’ve seen with my own eyes half a dozen businesses powered by IBKR. They use it to handle all their trading needs. Hell, even hedge funds use IBKR.
If institutionals use IBKR, I doubt a retail investor won’t be able to fit their needs.
Users with simple needs (buying ETFs or shares) can use the portal of the mobile app. For more demanding needs, nothing beats TWS. Yes, the user interface is ugly. But if you are working in finance you should know that people absolutely don’t care about that (the most used tool in the industry - by a mile - is Bloomberg Terminal, which is at least as ugly as TWS). Institutionals don’t want fancy UIs, they want tools that work reliably at the lowest cost possible.
Anyway, i am sure you will find how to implement your option trading strategy in TWS. If you’re not sure how to, I’d advise you to play with the sandbox demo account.
The professional trader risk and consequences depend on personal circumstances.
If you have the same 120k salary and a larger portfolio that may make (say) 300k gains on long stock positions in good years, whilst perhaps also having a margin loan => the risk of being classified as a professional trader is higher. The downside would be having to pay tax + AVS on the 300k as well as any profits from options trading.
A word of caution here: gaining 40% return on option trading doesn’t necessarily mean you are a good/great trader. It can also mean that you are taking risks which are too high. Since we don’t know which options were traded and how the risk management looked like, it’s just a number.
From what I know, 20% return on option trading per year is considered pretty good. Of course you can have better years as well, but the most important part is to have proper risk management and not lose your equity when things don’t go as planned.
Just as a warning for others who might be tempted to get into option trading.
Hi Mod @Julianek , thank you for intervening. Appreciate it. Interesting take here. Can you tell us what kind of financial institutions use IBKR, is that an asset management firm or trading desk or prop trading?
I don’t agree with you on the Bloomberg Terminal UI. I use Bloomberg a lot. That platform is super duber refined and polished. The workflow and user experience are topnotch. You can’t compare IBKR with BB. You can’t judge the aesthetics of the UI design. That’s to personal preference. But look at the layout and the quality of each button/icon and responsiveness there, they are just so well made. An almost 30k annual fee for the terminal says it all.
IBKR UI is a broken design. It’s bloated and cumbersome to use. The width of each field drives me nuts. And it’s sluggish and doesn’t utilize graphics card acceleration. If I click on something, it needs to be quick! I can’t wait for the software to refresh its interface to show me the numbers. Every sec counts. It feels flat overall.
In my humble career, I have not yet seen a firm using IBKR as their main trading platform. BB is always the way to go or institution’s own software. IBKR has an API and expansion tools for algo trading. I would imagine that some props or algo trading companies would use it for their automated trading. Companies use that primarily to save cost.
I played a bit with the option strategy box of IBKR, it’s horrible. After using TD, it is just day and night.
Just from how this thread developed I cannot understand your bashing against IB? If it’s so horrible, then use another provider? For some Schwab is perfect, for another one it’s Ameritrade. But I cannot see the sense of joining this forum where the people are focused on a better expense-revenue ratio - which Interactive Brokers provides.
You are not paying CHF 2’400 per month for IB as for Bloomy or something similar. The min. mothly fee of CHF 10 is even gone, for IB. But yes, I liked the keyboard only navigation pretty much as well
If you are not satisfied with IB, then use another provider - e.g. another all-in-one solution or you are using IB to execute transactions but doing the reserach on another platform. Or buy shares and ETFs on IB, option on another platform.