Fees & the Bid-Ask Spread: What Each Trade Really Costs
Before you place an order, do one sum: a premium that went up does not mean the trade made money, because every trade carries two visible costs — the fee, and the gap between the bid and the ask. Both are fixed the moment you open; how far price has to move before you break even depends on them first.
The fee: $0.65 per contract per side
Single leg: $0.65 per contract per side. Buy 1 contract to open and you pay $0.65; close it and you pay another $0.65 — $1.30 for the round trip.
Combos: vertical spreads and iron condors cost $2.50 per leg per contract on each open or close. Opening 1 vertical spread (2 legs) costs $5; opening 1 iron condor (4 legs) costs $10; closing costs the same.
Daily fee circuit breaker at $60: once the day's fees reach $60, no new positions can be opened that day. That is the discipline system working, not a bug.
All P&L is shown net of fees: the profit and loss you see in the trade log and the account already has the fees taken out.
The bid-ask spread: buy at the ask, sell at the bid
How it fills: buys fill at the ask, sells fill at the bid; the mid is only the midpoint of the two, not a fill price.
The spread is a cost: before fees, the round trip already costs you the spread. An example: a strike with a mid of $2.00, a bid of $1.80, and an ask of $2.20. Buy 1 contract and the premium costs $220; sell it right away and you only get $180 back. The spread takes $40; add the $1.30 round-trip fee and the round trip costs $41.30.
Check Spread% first: every Call and Put in the option chain has a "Spread%" column: the spread as a percentage of the mid, (ask − bid) ÷ mid. Anything over 20% is marked red. The wider the Spread%, the higher the round-trip cost — check that column before you order.
Wide spreads: wide spreads usually mean thin liquidity: far out-of-the-money strikes, and strikes near the close, often have wider spreads.
How to practice this in the simulator
Check Spread% before you order: start with strikes where Spread% is small, and leave the red ones over 20% alone for now.
Start with 1 long single-leg contract: the cost is plain to see — $1.30 in fees for the round trip, and the spread cost is right there on the chain.
Count the costs into your break-even: the ticket shows the cost of buying 1 contract (premium × 100 + $0.65 fee) — look at it before you place the order. The buy price is not the break-even price.
Watch the day's fee total: at $60 the day is done for new opens; when you review the day, look at costs before direction.
This simulator uses real CBOE option chains delayed about 15 minutes, starts with $10,000 in virtual funds, charges $0.65 per contract per side in fees, and shows P&L net of fees; short-sale margin is a simplified simulated rule at 20% of the strike, not a real broker margin. The simulator is for practicing orders, discipline, and review. It is not investment advice and promises no returns.