Value For Investors
Value For Active Traders
Commission & Fees
Platform & Tools
Overall, OptionsXpress proves to be a solid broker for traders looking to trade options, however, there are cheaper and better brokers out there.
OptionsXpress is an online discount broker that focuses on providing top of line option trading tools and commission rates and, as of recently, is a part of the Charles Schwab Corporation after being acquired in 2011. They offer all the major asset classes stocks, options, ETFs, mutual funds and fixed income products.
They have an extensive education center full of webinars, workshops and market commentary that helps further your understanding of the complex markets with easy to understand examples. They focus their efforts on catering to option traders as their name implies.
Trading Platform & Tools
OptionsXpress offers their flagship trading platform called Xtend that features streaming quotes and market data, time and sales, scanners, advance orders and charting and is currently free to non-professional users. The platform overall is good but not great. I found it to be slower than other platforms and the charting was difficult to use and seemed to lag. Placing orders was easy and the interface is semi-user friendly. Overall, the platform is usable but there are definitely some better options out there.
OptionsXpress offers some unique tools that turned out to be pretty useful. The Trading Patterns tool features a table that shows which options are trading the most volume giving you insight into where the volume is in the market and what direction traders are betting on it to go. The other really useful tool is called Idea Hub. With this tool you can scan for actionable trade ideas that quickly assess the trade with probability charts and order ticket that is pre-filled and ready to go putting you in an a position to act quickly should you decide to take the trade.
A really nice feature that OptionsXpress offers that many other brokers don’t is a Virtual Trading platform. Within the platform you will get real time quotes and streaming charts with $25,000 in virtual buying power. This is a great way to practice executing orders and fine tuning your strategies without any risk to real capital.
In the platform you can trade stocks, options and futures and you will have the ability to utilize advanced order entries. If you’re new to trading, starting in a virtual account is a great way to learn and practice. I know it won’t be the same as putting real money on the line but it’s still a good way to practice and could help you eliminate mistakes when trading real money. I still go back to using a virtual account every once in a while to try out new strategies or if I’ve been in a little bit of a trading slump.
Commission Rates & Fees
OptionsXpress has fairly competitive commission rates with the option to have an active trading rate or their standard flat rate. So if you trade a lot you can gain access to their cheaper commission rates that start at just $1.50 per contract if you trade more than 10 contracts.
If you trade less than 10 contracts then its a flat rate of $14.95. If you’re an active trader the commission rate is $12.95 for one to ten contracts and anything over ten contracts its $1.25 per contract. So, as you can see, these rates cater more towards the active trader and could really make an impact on your bottom line if you’re not trading a lot.
Now this is a competitive rate but its definitely not the cheapest option commission rate out there. If you’re an active trader and you trade 10 contracts with OptionsXpress it will cost you a flat rate of $12.95 and if you did that same trade with Ameritrade it’s $17.49, TradeKing its $11.45, TradeStation its $12.99 and at OptionsHouse its only $9.95. So at $12.95 you’re paying on average a higher rate, which doesn’t sound like a lot now, but it will add up over time.
For stocks they do not offer an active trader discount and all trades are charged a flat rate of $8.95 or $17.90 per round turn while Futures have a flat rate of $3.50 per contract. Like I said before, this isn’t the cheapest commissions on the street so if your main concern is commissions only then this broker may not be best for you.
OptionXpress has some promising tools and decent commission rates so if they could get their platform upgraded they would be a solid option to call home. As it stands now, I would only recommend it to casual investors who doesn’t need a super powerful platform.
The active trader will need a more powerful platform that will have direct market access and preferably access to hotkey functions like what LightSpeed or TradeStation has to offer. Their customer service was top notch so you will definitely be in good hands if you do decide to go with them.
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