Member R. writes in with a question that gets asked quite a lot:

I noticed that your two current trades have a credit of around .60 to .70. Doesn’t a trade for this amount of credit generate a lot of commission expense?

What do you do about commissions? Is that just part of the cost to do the trade?

So yes, on the face of things, it does look like iron condors impose higher commission costs. But that’s an illusion - in the sense that if you sell a call vertical today to fade a rally or something, and then you turn around and sell a put vertical tomorrow or the next day to fade weakness, you’ll end up with an iron condor and you’ll have paid just as much in commission costs (assuming fixed, per-contract costs; if you pay any kind of ticket charge, then obviously entering the trade all at once costs less). But the funny thing is, you don’t typically hear people complaining about the incredible commission burden of vertical spreads or calendar spreads.

R.’s question is totally appropriate, and it’s actually kind of commendable to keep an eye on transaction costs: many retail mutual fund investors, for example, are notoriously bad about paying attention to fees and costs.

At the same time, some people get so exercised about transaction costs that they spin themselves into inaction. I mean, if your primary goal is to pay as little in commissions as humanly possible, there’s an awesome strategy out there that will allow you to pay ZERO commissions for all eternity. True, it often lags the market averages, but it is beating the markets so far this year. The only downside is that it always gets beat by inflation. We’re thinking of offering a newsletter based around this strategy, if anyone is interested. The newsletter will be called “Cash”.