How much of an options trade do fees take?

Charged per contract, on every leg

Commissions and fees on listed options can be charged per contract, on opening and on closing transactions, and exercise and assignment can carry charges of their own. Where they are charged that way, a two-leg spread pays for both legs when it opens and for both again when it is bought back, and an iron condor pays for four legs each way. None of this depends on how much the trade risks. The amounts differ by broker, and your broker’s fee schedule is the one that binds.

Narrow and many-legged trades pay the most

A fixed amount per contract weighs most where each contract collects little. Five narrow spreads can carry about the same risk as one wider spread, yet they fill ten legs to open and ten to close instead of two and two, and an iron condor fills four legs each way where one spread fills two. Taking profits early does not remove those closing fills; it only shrinks the win they come out of. Set the fees against the planned win, not the maximum loss, and the gap between such trades becomes clear.

Entering fees in a calculator

The credit spread and iron condor calculators work with the credit you enter and assume every leg reaches expiration. Enter the credit after opening fees, in the quoted price, for example 1.48 instead of 1.50 when two legs cost 1 € each. The calculator then lowers the maximum profit and raises the maximum loss by the opening fees, and moves the break-even by the same amount per share. Closing fees on both legs do not show there; they come off the win when you buy the spread back.

The common misreading

Costs are often assumed to grow with the risk taken, as if a small trade paid a small fee. They grow with legs and contracts instead. Five narrow spreads that risk less in total than one wide spread still pay five times its fees, on both legs, opening and closing. Whether fees matter for a strategy therefore depends on how many contracts and legs it needs per euro of planned win. Slippage is a second cost on every fill and has its own page.

Worked example

Hypothetical numbers for illustration, not a market quote and not a recommendation.

Assume a hypothetical fee of 1 € per contract and leg on every opening and closing fill, and none when an option expires worthless. One 95/90 € put spread sold for 1.50 € pays 2 € to open and 2 € to close. Entered as 1.48 instead of 1.50, the credit spread calculator shows 148 € instead of 150 € maximum profit, 352 € instead of 350 € maximum loss and a break-even of 93.52 €. Bought back at 0.75 €, the planned 75 € win becomes 71 €; fees take 5.3 %.

Five 95/94 € put spreads at 0.40 € each pay 10 € each way: 190 € maximum profit instead of 200 €, 310 € maximum loss instead of 300 €, and a managed win at half the credit of 80 € instead of 100 €, 20 % less. The 90/95/105/110 € iron condor for 1.80 € pays 4 € each way; entered as 1.76, it shows 176 € and 324 €, and its 90 € win at half the credit becomes 82 €.

Strategies where the term matters

• Short Iron Condor — Is the range you expect genuinely narrower than the move the market has priced in?
• The Wheel — Would you buy and hold this stock even without the option premium?
• Long Call Butterfly — Do you have a precise price target - not just a direction?

Calculators for this term

• Credit Spread Calculator
• Iron Condor Calculator

Track it in your journal

• Options trading journal for spreads and multi-leg strategies

Related terms

• Slippage
• Break-even
• Spread width

Every term in one place: the options glossary.