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.
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.
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.