Questions about E*Trade's fees and commission.

Question

Assume:

Trades per quarter: 1500

Commission: $6.99

Per options contract:75 cents

Does this mean that the $6.99 covers 1500 shares in a quarter? And if you've traded way past 1500 shares, the cost is 75 cents per share?

Also if you have a thousand share worth $1000 when you bought it and you sold it a week later at $1010. Did you make a profit? ($1010-1000=$10), (10-6.99=3.01) So did you just make $3 in this case or are there other fees that I have missed out?

Thank you guys.

Answer 1

<<<Does this mean that the $6.99 covers 1500 shares in a quarter?>>>

No. It means that if you make at least 1,500 trades in a quarter the commission on each trade is $6.99.

<<<And if you've traded way past 1500 shares, the cost is 75 cents per share?>>>

No. Options contracts are a different type of security. They charge $0.75 per options contract, but it is unlikely you will be trading options contracts until you know what they are.

The 1,500 figure has nothing to do with the number of shares traded. It is the number of trades made. Each trade could be for a single share or thousands of shares.

<<<Also if you have a thousand share worth $1000 when you bought it and you sold it a week later at $1010. Did you make a profit? ($1010-1000=$10), (10-6.99=3.01)>>>

If you bought 1,000 shares of a stock at $1 you would pay ((1,000 x $1) + $6.99) = $1,006.99 for the shares. If you later sold them for $1.01 per share you would receive ((1,000 x $1.01) - $6.99) = $1,003.01. That means you would have a loss of $1,006.99 - $1,003.01 = $3.98 instead of a profit.

<<<So did you just make $3 in this case or are there other fees that I have missed out?>>>

You only included one commission. You pay a commission for each trade, one for buying and one for selling. That makes your total return a loss instead of a profit.