OptionsXpress Review - The Best Broker For Trading Options

Ned Bennett, Jim Gray and David Kalt founded OptionsXpress. While all three were traders, they all were involved in different areas. Kalt was a retail investor, Gray was a market maker and Bennett was a broker. They understood that options were an important part of investing and nobody in the online brokerage world had approached the need for emphasizing that market. From the time they began the business in 2001, they grew dramatically as the public learned more about options as both an investment and as protection for stock holdings.

The Charles Schwab Corporation made a $1 billion offer in March of 2011 for the online company and the deal closed before the end of the year. The company has been a leader in online trading for stock options and futures since its inception and made a net income of $51.9 million dollars in 2010. They hold $8.1 billion dollars worth of client assets. While the trading platform was one draw for Schwab, the client base was also a huge attraction. The client base of OptionsXpress tends to be sophisticated clients who are comfortable with online financial options and would consider the other services Schwab has to offer, such as their online banking services. Even though Schwab now owns OptionsXpress, the site will keep its own branding identity.

Cost of Services

When doing any OptionXpress review or other online review, the cost of services is important. The active trader pays less than the standard rate for options, spreads, straddles and combos with a flat rate of $12.95 for 1-10 contracts compared to $14.95. For more than ten contracts, the price is $1.25 per contract for the active trader compared to the standard rate of $1.50. Penny options are $4.95 flat rate for 1-10 contracts and $0.50 for more than ten with a reduced rate to buy-to-close options of less than $0.05. The margin rates are middle of the road compared to other online brokerage firms.

Trading stocks costs $8.95 and futures contracts are $6.99 for 1-40 contracts. The price continues to drop the more you purchase until it reaches $2.99 per contract when you buy 1,001 or more. Purchasing options on futures contracts also decreases the more you purchase with the lowest price at $5.99 and the highest at $12.99.

Bonds cost $5.00 per bond with a $9.95 minimum and mutual fund trading is $9.95 plus any fund load.

Products and Services

The concept at the inception of the company was to create a site that allowed the user to deal in stocks, futures and options. While they offer other types of trading such as mutual funds, bonds and ETFs, the site’s primary focus is still on the more sophisticated type of investing.

Every OptionsXpress review will note the tools on the site. Many of the tools available on OptionsXpress are powerful aids to traders. The Screener helps find investment opportunities that fit the investor’s parameters. Strategy Scan analyzes those trades. Xtend is the actual platform for trading that has a wealth of information available as you trade. It’s a professional platform offering 20 different tools, which is easy for beginners but impressive even to the seasoned trader. Xtend is truly a leap toward easier one-click trading.

Platform

One of the reasons Schwab purchased OptionsXpress was for the platform and tools available on the site. This OptionsXpress review has to agree with that decision. While OptionsXpress will retain its own identity, Schwab plans to use some of the innovative tools and trading abilities of the site to update its own platform, something that’s been lacking for a long time. As noted previously, the Xtend platform is one of the most advanced on the net. You can click on a ticker from any location and then simply buy by adding the additional information such as trade size.

Positives

• This is the site to trade options and futures since the focus is on the two and they aren’t simply additions to appease some customers. The price for trades in theses areas are good.
• The educational tools are excellent.
• OptionsXpress has no minimum to open an account.
• The site offers free broker-assisted trades.
• There is excellent customer service available.
• The platform at OptionsXpress is one of the most impressive on the Internet.

Negatives

• The cost of trading stocks is middle-of-the-road compared to other online brokers.
• They charge an outlandish amount to purchase mutual funds, particularly loaded funds that offer them a commission from the load.

Conclusion

Schwab made a good decision when they purchased OptionsXpress. The online brokerage site has excellent software tools available to all, not just the big investor. Their customer service exceeds expectations and the many accolades and awards demonstrate that. If you want an overall financial site to hold everything from mutual funds to options, this one isn’t for you. If you want a site that offers superior information and service for options trading, consider opening an account at OptionsXpress.