Which broker has the best service, execution and commission rates for option investors?*
It might be hard to believe, but many brokerage firms are inexperienced at placing and executing your option trades efficiently. Even some of the big name brokers out there don't have the ability to place more than basic option trades on their web sites. And when you talk to a broker representative on the phone you need someone with extensive, real, options experience... It's not your job to train their brokers!
As you get more experienced at enhancing your portfolio with options, your trading volume will go up. You'll trade more because most trades will likely make you money. Real cash in hand on the day of the trade. So... As your trading volume rises, broker commission rates will be more important to you.
There are three main types of broker/dealers...
1. Online Discount - Low commissions, online trading and good service.
2. Full Service - Investment experts to walk you through every step of the way and much higher commissions.
3. Direct Access - These brokers give you online tools so you can route your trades to the exchange you want.
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The Best Online Discount Brokers - Stock Option Broker - Online Options Broker - Option Trading Brokers
OptionsXpress (member NASD, SIPC) focuses specifically on options traders. Everything from their name to the extensive tools on their web site are built for option investors. Their order entry system allows Covered Calls, Collars, Spreads, Straddles, and Butterflies online. They offer some great online learning resources for new option investors and their commission rates are a low $1.50/contract with a $14.95 minimum (10 contracts = $15.00) and no hidden fees.
OptionsXpress has a very simple and streamlined account opening procedure with nearly painless paperwork. Their account transfers are also a breeze with minimal paperwork and a team of great people to get the transfer done quickly and error free.
During our testing of optionsXpress we were particularly impressed with the following unique services and features:
Option Book Details - With a few clicks you can see the real-time current bid and ask on each of the exchange any option is trading on. Helps you find the best place to buy or sell an option.
Email Alerts - Who wants to sit and wait for a trade to fill? With optionXpress you will be notified by email when your trade fills. You can also set real-time alerts for stock and option prices.
Service, service, service - Along with the toll free customer support, optionsXpress has a built-in chat feature that puts you directly in touch with one of their customer support people. All our test questions were answered quickly and professionally. These people know their options.
A full menu of option trades in retirement accounts - With some brokers you can only do covered call trades in your IRA or ROTH retirement accounts. At optionsXpress you can also buy calls, buy puts, sell cash secured puts, trade debit and credit spreads... For approved option investors this added flexibility really is a big plus.
All this, free checking and automated funds transfer, too - It's always easy to get money into your brokerage account but not always easy to get it out. That's why optionsXpress offers free checking. That will come in handy at tax time when you have to pay Uncle Sam because of all your profits.
To set up an account with OptionsXpress, go to optionsXpress.com, or call 1-888-280-8020.
Please note: Online trading has inherent risks due to system response and access times that vary due to market conditions, system performance and other factors such as your Internet provider. An investor should understand these and additional risks before trading. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.
TradeKing is a nationally licensed online broker with a mission to help investors become smarter, more empowered stock and options traders. They offer all traders the same fair and simple pricing – just $4.95 per trade, plus 65 cents per option contract – plus an intuitive trading platform and advanced suite of trading tools, no matter how often they trade, or the size of their account. All clients get white-glove customer service too, with short hold times, instant online chat with brokers and broker-assisted trades at no extra charge.
The TradeKing web-based platform features 19 different Option Chain views, 14 of which are strategy-based. Each view includes bid and ask prices, plus net delta for the strategy. Just choose your strike prices, and the option-trading screen will be pre-populated with the data you need to place your order.
For advanced traders, our "Call Calc" and "Put Calc" modeling chains enable you to view all Greeks for a specific option, and forecast future option prices for the entire chain. You choose the pricing model – Black Scholes or Binomial.
Placing orders for stocks and ETFs takes just seconds with TradeKing. Simply specify your action, ticker symbol, price, and type of order, and it’s off to the Trading Floor. It’s even simple to place advanced trades involving Trailing Stops, Contingent Orders, One-Triggers-Other or One-Cancels-Other, using our Advanced Orders menu.
Their suite of powerful trading tools is a big reason why Barron’s awarded them a four-star rating (the highest given to any web-based broker) in their March 2007 Broker Survey. It includes an Options Calculator, Profit + Loss Calculator and Probability Calculator to help optimize your trades. Plus, you get an Options Scanner, Strategy Scanner, Stock, ETF and Mutual Fund Screeners, and Technical Analysis Tools to help you find new trading ideas and identify securities suited for your favorite strategies.
They also feature an innovative community where like-minded traders can connect with one another, share experiences and trading strategies, and see what other investors are doing in the marketplace. Membership in the TradeKing Community is free.
Check out TradeKing for yourself and see why, in August 2007, SmartMoney Magazine rated us the best discount online broker for the second year in a row.
The Best Full Service Brokers
Even if you already have an account at a discount broker you may want to consider keeping a portion of your assets with a full service broker. Someday you may not want to (or be able to) actively manage your portfolio and you will want a trusted broker to take over. Now is the time to establish and nurture that important relationship so when you need to make a transition, things should go over without a hitch.
Deciding to use a full service broker is like deciding to get married. (Some full service broker relationships last longer than marriages) You place a large amount of trust in your full service broker and it's important for your broker to understand your risk tolerance and financial goals.
Full service brokers usually provide extensive investment strategy and promise superior execution. To execute your trades they have people on the exchange floors fighting to get you the best price possible.
If you are unsure of your own option investment strategy, it might be best to seek out a full service broker. They can implement more exotic trades and take a more active role in managing your portfolio. But...You pay for it in higher commissions. If your full service broker is doing his job, most likely you will make up for those higher commissions with higher profits. And…each of these brokers has the added benefit of using PowerOptions to seek out the highest return investments for you.
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Man Financial
Man Financial Inc. is one of the world's major futures and options brokers and commands a global financial presence with offices in New York, Chicago, Kansas City, London, Paris, Singapore, Taiwan and California. Man Financial provides brokerage and other related services to a worldwide client base, which ranges from banks, "CTAs," "Hedge Funds" and major industrial groups to individual private clients.
Man Financial Inc.'s Securities Division, Man Securities, has been recognized as one of the world's leading option order execution firms. What differentiates them from other brokerage firms is their commitment to deliver the best option order execution service with the highest standard of customer service to their clients.
Many clients prefer to place orders directly through a representative on Man's trade desk but they also have the choice of trading via a web site. But, no matter which way you trade, you will always have the confidence and ability to speak with an option experienced Man representative at any time during trading hours. In fact, when you call Man to place an order you are calling the trade desk directly without the presence of annoying phone trees. A high degree of value is placed on this communication process. Trading options poses certain risks in itself. One risk that no investor should be exposed to is the inability to execute a trade because of a communications gap.
Man has a dedicated spread desk to assist customers in the execution and pricing of option spreads. Their spread desk staff is well versed in implementing a wide rage of option strategies and they are able to identify the best exchange on which to execute an option spread order.
The majority of all online brokerage firms offer account information. What differentiates ManSecurities.com from the others?… Execution speed, reliability, options analytical packages, and account balances updated on a real time basis. Most important, Man utilizes one of the most advanced options trading systems available in the industry.
Man does not solicit trades or conduct its own investment research. A Man representative will work with you and help you place the order. Their goal is not to intimidate or rush anyone. They want to educate customers so they can avoid errors and develop an efficient method for taking orders.
Man's experienced options desk takes pride in its excellent value-added service -- with commissions that are amazingly close to those of a discount broker.
Please note that options are not suitable for all investors and investing in options carries substantial risk. If you're considering investing in options, please call Sharon at 800-837-6212 so she can send you a copy of Characteristics and Risks of Standardized Options.
To learn more about Man Securities, contact a representative at 800-837-6212, or go to http://www.mansecurities.com/.
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The Brokers listed above may not have the lowest commissions available but the amount you pay over deep, deep discounted commissions some companies offer will be more than made up for by the peace of mind that you are trading with an experienced brokerage company who will place and execute your order in a highly professional manner.
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