As we have all heard and known of the news by now, trading platform TD Ameritrade Singapore will stop its services to serve the retail investors from December onwards. It aims to focus on the accredited investors which is a segment they think it will benefit them more in the longer run.
As a result of this strategic move, TD Ameritrade urges retail investors who have accounts with them to withdraw and move their assets as soon as possible.
TD Ameritrade further added that it will waive or refund any of the platform’s transfer or wire fees incurred by retail investors up until the end of the year for an entire sweep of account transfers or wire withdrawals.
However, retail investors will have to continue paying the monthly account maintenance fee until their account cash balance is empty.
Time to Move Your Assets to: Tiger Brokers
If you are one of those who have been affected by the recent news from TD Ameritrade, it is not all doom and gloomy.
Thankfully, we have other reliable brokerage firms that I have personally used and worked with, and one of them is Tiger Brokers.
I have previously written a couple of articles in the past on Tiger Brokers which if you are still interested to read them, you can find it here and here.
For those who are new to Tiger Brokers, they are one of the first digital brokerage platforms which come into the Singapore retail scene – offering a plethora of product lines such as stocks, options, funds, and many more.
What strikes me to this brokerage in particular is not just how competitive their commission and trading charges are comparatively to the other brokers, but also their impressive product lines and features that improves the overall customer’s investing and trading experience.
If you are someone who is looking to invest your money in the Singapore, Hong Kong, and US market, Tiger Brokers should definitely be in one of your considerations.
Instructions to transfer your shares from another brokerage is also available and you can find it here in detail.
Tiger Brokers (Special Highlights): Option Features
For those who are slightly more sophisticated investors or traders, you may want to consider the option trading features which Tiger Brokers also provide.
Options is a derivative instrument that typically involves a strategy that allows the buyer or seller to buy or sell an underlying asset at a specified strike price on or before a specified date.
There are many Options Strategies type – of which Tiger Brokers currently offers the nine below:
1. Covered Call: A combination of 1 lot short position in a call option and 100 shares long position in the same underlying U.S. stock.
2. Covered Put: A combination of 1 lot short position in a put option and 100 shares short position in the same underlying U.S. stock.
3. Call Vertical Spread: A combination of 1 lot short position in a call option and 1 lot long position in a call option. This option strategy can be combined when the call options aforementioned have the same underlying (U.S. stock or index), the same expiration date, and different strike prices.
4. Put Vertical Spread: A combination of 1 lot short position in a put option and 1 lot long position in a put option. This option strategy can be combined when the put options aforementioned have the same underlying (U.S. stock or index), the same expiration date, and different strike prices.
5. Short Call and Put: A combination of 1 lot short position in a call option and 1 lot short position in a put option. This option strategy can be combined when both options aforementioned have the same underlying (U.S. stock or index) and the same expiration date. The strike price of put option is equal to or less than the strike price of call option.
6. Protective Call: A combination of 1 lot long position in a call option and 100 shares short position in the same underlying U.S. stock.
7. Protective Put: A combination of 1 lot long position in a put option and 100 shares long position in the same underlying U.S. stock.
8. Call Calendar Spread: A combination of 1 lot long position in a call option and 1 lot short position in a call option. This option strategy can be combined when the call options aforementioned have the same underlying (U.S. stock or index), the strike price can be different. The expiration date of short position is earlier than the expiration date of long position.
9. Put Calendar Spread: A combination of 1 lot long position in a put option and 1 lot short position in a put option. This option strategy can be combined when the put options aforementioned have the same underlying (U.S. stock or index), the strike price can be different. The expiration date of short position is earlier than the expiration date of long position.
Case Study: Tesla (Nasdaq: TSLA) – Put Vertical Spread
Let’s explore this on a real case study on Tesla (Nasdaq: TSLA) by using the Put Vertical Spread strategy.
A Put Vertical Spread is a bullish option strategy and an alternative to the sell put strategy, but with limited risk (and also upside as a trade-off). With the vertical spread strategy, you are still getting your premium from selling a put at strike B but limiting your risk with strike A if the stock goes down.
This strategy involves:
i.) Buy put at strike price A
ii.) Sell put at strike price B
Max Profit: Net premium received
Max Loss: Strike Price B less Strike Price A less net premium received
Let’s say I am bullish on Tesla after its recent earnings overdone on the share price.
As of writing, Tesla is hovering around the trading price of $211 – which I think would represent a very strong support for the next few weeks and months.
I will be executing this strategy as a case study using the Jan 2024 expiry, which gives us around ~90 days to expiration.
- Sell Put at strike $230, I will receive a premium of $30.2 – which at 100 shares net me a proceed of $3,020.
- Buy Put at strike $200, I will have to pay a premium of $14.7 – which at 100 shares I will have to fork out $1,470.
The net premium received less paid will be at $3,020 – $1,470 = $1,550 per contract.
Most platforms would require us to initiate two different transactions separately to create a vertical strategy.
However, with the platform feature on Tiger Brokers, we can now select the vertical strategy that would initiate the two together.
You might be curious as to what are the upside and downside risks in using this strategy so I will be detailing the different scenarios.
Scenario 1: Tesla hits $240 (above strike price of $230) on or before expiration
This scenario is aligned with our bullish expectation that Tesla will rebound from here.
With a strike price of put (selling) at $230, we are essentially betting that Tesla will move up higher than $230. We will collect the entire premium received earlier and will not be assigned to the stock.
This move however caps my upside for profits that are between $230-$240 in this case.
Still, my total profits in this case would be $3,020 – $1,470 = $1,550.
Scenario 2: Tesla hits $190 (below strike price of $200) on or before expiration
With the put vertical strategy being bullish on the position, this move is a bet against the strategy.
The put we have written earlier at strike price $230 will now get “assigned” to me at expiration and are now sitting at a loss. Thankfully, we have earlier hedged this position by buying a put at the opposite end with a strike price of $200 so this will help to offset the downside.
Our total profit / (loss) in this case would be [($200 – $190) – ($230 – $190)] x 100 shares + $1,550 = -$1,450.
We made a loss in this case but it is offset by the premium received earlier as well as the vertical spread hedge strategy.
Had we simply done the single option strategy, the loss would be more magnified.
Scenario 3: Tesla stays at $211 at expiration
In a scenario where Tesla stays within the same range as first when we had executed the strategy, say at $211 – we will get assigned at the $230.
Our total profit / (loss) in this case would be ($211 – $230) x 100 shares + $1,550 = -$350.
The put vertical strategy is ultimately still a bullish strategy, so the further it goes up, the more likelihood it will work in your favor while limiting the downside with a floor strike.
Tiger Brokers Options Trading Pricing
With Tiger Brokers now dropping their commission and platform charges from USD 2.99 (USD 1.99 commission + USD 1.00 platform) to USD 0.65 (USD 0.35 commission + USD 0.30 platform) per contract, this is a great incentive for those who are looking for a trusted brokerage platform to trade on options.
This is applicable to both new and existing users of Tiger Brokers to enjoy and unlock these ultra-low fees.
Furthermore, as a new user, you get to enjoy a few other rewards below when you make an initial deposit of > SGD 1,000 and complete 5 new buy trades.
- Apple Fractional Shares worth USD 30
- Sure-win draw (1) attempt
- 0-Commission trades for US stocks (180 days), HK & SG & CN A-shares (365 days)
- Ultra-low fees on Options
- Free Courses and Others
Sign up for your Tiger Brokers account now and receive your welcome rewards as a new user. You may also want to follow me at my channel page at Tiger Brokers where I frequently share my insights.
Disclaimer: This post contains affiliate links and is written in collaboration with Tiger Brokers. However, all opinions stated are that of my own, based on my experience and services received from Tiger Brokers.
