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Summary

TOMIC (2012) treated commissions and wide bid–ask spreads as a first-order drag on retail option selling, and its guidance on order entry, "market-maker pricing," and cost control reflects that era. Since then, zero-commission retail options trading, penny-priced (and better) index option markets, extended-hours trading, and deep SPX liquidity have shifted the economics. The books' techniques remain valid; their cost assumptions are stale.

Zero Commissions (2019)

  • The October 2019 shift of major US retail brokers (Schwab, then TD Ameritrade, E*TRADE, Fidelity, Robinhood) to zero-commission options trading removed per-contract charges at most retail brokers (regulatory/exchange fees of a few cents to ~$0.65 per contract remain at some brokers — verify your broker's schedule).
  • TOMIC-era logic — "every adjustment costs commissions, so minimize adjustments" [^tomic-infra] — overstates the friction today, though fees and slippage still dominate round-trip cost. Cost model discipline (per the EV contract) now weighs spread crossing and fees, not commissions.

Penny-Wide SPX and Depth

  • In 2022 Cboe reduced minimum tick sizes for SPX options to $0.05 above $3 and to $0.01 below $3, and penny-wide (or narrower) quoted spreads became routine in ATM SPX series during regular hours. [^cboe]
  • By contrast, in 2012 SPX options typically quoted in $0.10–$0.50 increments with meaningfully wider effective spreads in fast markets. SPY has long quoted penny-wide but with per-contract share-settlement frictions.
Feature ~2012 (TOMIC era) Mid-2020s
Retail commissions ~$1.00+/contract plus base fees $0 (plus small fees)
SPX tick / typical ATM width $0.10 tick; widths often ≥$0.20 $0.01/$0.05 ticks; ATM widths often $0.05–$0.15 (approximate)
Extended-hours options None SPX and some ETF options trade in overnight/global sessions (e.g., Cboe's 24×5 GTH, ~ET 8pm–9:15am) [^cboe]
Retail access to SPX Limited at some brokers Universal at major brokers

Extended-Hours Trading and Cash-Settlement Advantages

  • Cboe's Global Trading Hours (GTH) session lets SPX options trade nearly around the clock on weekdays, letting premium sellers manage risk through overseas sessions and earnings-adjacent news gaps rather than holding blind overnight positions — a structural change in how the TOMIC "never hold through a gap naked" rule can be implemented.
  • SPX's European-style cash settlement eliminates early-assignment risk and dividend/legging complications (see 0DTE Complex for expiration mechanics), and 100× contract size suits defined-risk spreads; XSP (1/10th-size index option) gives smaller accounts the same cash-settled profile.

What Changed for Retail Premium Sellers — Synthesis

  • Selling short-dated premium is no longer commission-constrained: the marginal cost of closing at $0.05 to avoid assignment, adjusting a spread, or rolling is now mostly spread-crossing. Strategies the books priced with a 3–6% cost haircut may show ~1–3% effective friction today (approximate; always measure per your broker).
  • But spreads widened differently where it matters: while ATM liquidity improved dramatically, far-OTM wings and illiquid underliers can still have punishing effective spreads; and the sheer growth of 0DTE flow means short-dated SPX markets move faster, so slippage on urgent exits can exceed any commission saving.
  • Execution discipline still applies: TOMIC's guidance to work limit orders mid-quote, avoid market orders in options, and leg entries carefully [^tomic-exec] remains correct — it is now easier to follow because quotes are tighter and retail platforms have improved.
  • Net effect: the strategy economics of premium selling improved modestly; the competitive landscape changed more, since zero commissions plus 0DTE pulled large speculative flow into short-dated options (see VIX ETP Flows).

Links

References

  • [^cboe] Cboe Global Markets — SPX options tick-size change notice (2022) and Global Trading Hours documentation: https://www.cboe.com/us/options/ ; press coverage of the October 2019 commission cuts (Schwab/Ameritrade announcements).
  • [^tomic-infra] Chen, M. & Sebastian, J., The Option Trader's Hedge Fund, 2012 — infrastructure and cost chapters.
  • [^tomic-exec] Chen, M. & Sebastian, J., The Option Trader's Hedge Fund, 2012 — trade execution chapter.
  • OCC (Options Clearing Corporation) — contract specifications for SPX (cash-settled, European) and XSP: https://www.theocc.com/market-data/market-data-reports/contract-specifications