Sold to open XON 7/22 expiration, $25.50 strike calls

action

Sold short 1 contracts of XON 7/22 expiration $25.50 strike calls at 75¢. Total proceeds after commission were $67.05. Proceeds per share after commission was 67¢.

rationale

This was a last-minute attempt to extract some yield from the long Intrexon position I had established on Wednesday of last week. I entered a limit order near the close of the trading day, and wound up with a partial fill. My mistake. But then I learned something interesting: Fidelity, the broker through whom I had entered this trade, actually foregoes their $0.75/contract variable commission component for opening option trades, if their $7.95 base commission already exceeds 5% of the total transaction value. In pseudo-code the opening commission is calculated like this:

min(100*(contract count)*(opening price)*0.05, 7.95+(contract count)*0.75)

A nice touch! The commissions, margin rates and fees page on Fidelity’s web site doesn’t display this. Probably because nobody would purposefully trade in such small size that the opening commission of the trade already exceeds 5% of the transaction value.

July 18, 2016 at 2:45pm · XON · sold to open · options · Fidelity


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