Vertical spreads
How does exercise fee structures at retail brokerages alter the viability of low-dollar vertical spreads?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Per-contract exercise and assignment fees charged by some brokerages can meaningfully reduce the net profitability of low-dollar vertical spreads, since these fixed fees represent a larger percentage of the total gain on smaller spreads compared to larger, higher-premium positions.
How it works
Traders evaluating low-width or low-premium spreads should factor in potential exercise, assignment, and contract fees alongside commissions when calculating expected net returns.
An example
A $1-wide spread generating $20 of profit could see a meaningful percentage reduction if the broker charges a flat $5 exercise or assignment fee upon expiration.
Risk & limitations
OIC notes fee structures vary significantly between brokerages, so traders should confirm specific exercise and assignment fee policies before relying on narrow-spread strategies.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.