I’ve been covering a number of online stock brokers here including the likes of Scottrade, TradeKing, ETrade and many more, as an exercise in discovering which sites out there are supportive of investors and traders alike.
I remember the “old” days when I’d call up my stock broker or when I’d visit my local Charles Schwab branch to talk to a representative who could help me work out the kinks in my investment portfolio. These days, there are slick new investment sites (online brokerages and mutual fund companies’ sites) that are available for us to use, providing us a highly convenient platform for our own investing activities. And interestingly, Charles Schwab has acquired OptionsXpress as part of Schwab’s bid to provide its customers with a richer brokerage experience. They sought expertise in the futures and options area, and they found it in OptionsXpress.
OptionsXpress Review: A Broker For Stock Investing and Options Trading
Well there’s a stock brokerage for everyone. If you happen to be looking for a stock broker that focuses its support on the more advanced aspects of investing and trading, then you may be interested in a site like OptionsXpress.
If you check out our post on the latest discount broker survey by SmartMoney, you’ll see how well OptionsXpress ranks among all other online brokers. This brokerage has received generally high marks, and here’s why:
Awards
OptionsXpress has one of the cleanest sites around, but do they measure up to their “look”? Well, here are their notable honors:
- Barron’s “Best Online Broker” for several years straight (from 2003 to 2006) and recipient of Barron’s 4 stars for 10 straight years.
- Recipient of numerous industry awards and recognized as one of the best brokers over the past decade for certain categories (Trade Experience, Technical Trading Tools, Usability, Research and Customer Service Access)
- Forbes “Best of the Web”
- Smart Money “Best Discount Broker”, with 5 stars for tools and costs.
For quite a while, they were tops in the broker race until ETrade took over. I then attributed this momentary eclipse to the fact that ETrade had expanded their investment product offerings and banking area, thereby coming across as the more “all around broker”. Subsequently, broker surveys showed that OptionsXpress could improve in areas of customer service and banking services, even as they scored pretty highly for their technical tools and the customer trading experience they offer. Well, they have recently addressed these issues by joining forces with Charles Schwab. Let’s talk about that for a moment.
Integration With Charles Schwab
In the first half of 2011, we were greeted with the news that Charles Schwab, the well-known discount broker, was to acquire OptionsXpress. Today, the acquisition has transpired and both entities are working on integration plans in order to provide their customers with a better trading experience, especially in the advanced options trading arena. As part of the integration, transfers and transactions across Schwab and OptionsXpress will incur no fees.
Because of this partnership, customers of both companies can expect to see complementary services that can promise them a much more well rounded investment experience. This new entity will now be able to provide advisory and other financial services for general investors, banking services through Schwab Bank as well as enhanced trading functions through OptionsXpress. Customers will have access to more complex options and futures trading strategies using high quality trading platforms, while having the ability to do their banking under the same umbrella.
Pricing
With regards to pricing and rates, I’d classify them as middle of the pack among online brokers with commissions in the $1.25 to $1.50 range per options contract; with fees at the lower end, the more actively you trade. Same thing goes for their price per futures contract ($2.99 if you’re a high volume trader; fee range for futures is $2.99 to $6.99 depending on activity). As for stocks trading, they’re in the same boat as ETrade, at $9.95 per trade.
Investment Products and Virtual Trading
OptionsXpress clearly shines in the areas of options and futures. They’ve got strong technical support in these areas, but they also offer a great environment for those investing in stocks, ETFs, bonds and mutual funds. They allow perks such as free broker-assistance, free account transfers ($100 credit if you transfer a minimum of $2,000 to them) and the ability to open any account type. You’ll also get free Morningstar reports, stock tools, access to over 4,500 no load funds and a well-integrated bond platform that gives you access to municipals, corporates, treasuries, CDs, etc.
And here’s another bonus: I like how they have a “Virtual Trading” feature that allows you to trade without risk: if you open an account with them, you can then set up a virtual trading account where you can practice trading as much as you want!
Trading Tools and Resources
Here’s where OptionsXpress rules. If you visit their Tools Center, you’ll see their tools neatly lined up with learning videos and tutorials that are classified according to customer experience/education levels. This part of the site is extremely well organized and comprehensive. Here’s a taste of what they have:
- To help you FIND your next investment, check out their whimsically named tool called the “Dragon” which is their powerful search engine for options and stocks. Other applications help you screen for analysts’ recommendations and for investing opportunities based on market sentiment, trading patterns and chart patterns.
- To help you ANALYZE your investment positions, they’ve got applications that include a Trade Calculator that helps you gauge risk vs reward, an Option Pricer that shows you how market conditions can influence options pricing, and your standard systems for Quotes, Watch Lists, and Alerts.
A visit to their tools section will uncover a myriad of helpful functions, including The Screener, StrategyScan, Trading Patterns, Chart Patterns, Position Analyzer and so much more. The standout is their Xtend Software, which is a sophisticated downloadable trading software application for more serious and active traders.
Investment Education and Research
Like many new-fangled brokers out there, OptionsXpress gives you a free investment education once you sign up with them. I like how they categorized their “education tracks” according to what it is you want to learn about. For information on any investment product (options, futures, stocks, bonds, ETFs and mutual funds), they have video tutorials that cater to the novice, intermediate and advanced investors. There are also demos, newsletters, webinars and live events you can attend to beef up your knowledge. They also go the extra mile by giving you access to a “Personal Coach” who’ll provide you weekly one-on-one coaching sessions, self-tests, training materials and a hotline.
Usability, Ease of Use
Can this broker’s website be any slicker? This broker prides itself for being one of those rare sites that gives you one central account login to access ALL their investment platforms. I once worked at a couple of financial institutions where behind the scenes, I dealt with a spidered network of systems that had to be integrated. Generally, systems integration and data processing behind the pretty broker screens aren’t as tight as what you may be led to believe. So this ability to trade everything from options to bonds in the same account is actually a plus.
Closing Thoughts
OptionsXpress is geared toward active traders and investors, particularly those who are interested in advancing into other types of trading (e.g. commodities, futures and options), but their integration with Schwab makes them even more accessible to all types of investors. Still, long term investors may also want to consider brokers like Scottrade, ETrade or Sharebuilder (the latter two also have well developed banking and money management platforms), or a mutual fund company like Vanguard or Fidelity.
Created June 19, 2009. Updated November 15, 2011. Copyright © 2011 The Digerati Life. All Rights Reserved.
{ 14 comments… read them below or add one }
I’ve been interested in trading options and have been working on teaching myself how to do it. The resources from this site look good. A lot of tools here – are these free? I might try out the virtual trading they have.
John,
Yes the tools are free if you open an account. A lot of brokerages and mutual fund companies have great tools you can use for analyzing your portfolio and holdings. Some brokers like OptionsXpress focus on active investors and traders, but they also have more conventional stock and mutual fund investments available for you to invest in as well even if you simply intend to hold on to your positions for the long term. While online brokers do cater to both active and passive investors, these brokers grow their business by developing additional products to address the requirements of their main clientele.
yeah, i have always been interested in investing in stock. I am a little shook up after the stock crash earlier this year, but i think I will give it a go if these tools are free! I’m about to check this out now.
Good Review,
I’m a full time options trader and I concur. I’ve been a member of optionsXpress for 5 years now. So that is my shameless plug for optionsXpress.
They have plenty of free information available on their site to help you become a better trader.
As always your review is detailed. I want to point to the readers (especially long time investors) something that’s missed in all online brokerage reviews.
It’s the ease of doing tax-lot trading without the hassles of keeping records. Long timers know how useful this tool is, so they keep full-service brokerage accounts which allows you to choose lots online or over the phone. (Now you know the secret why these are still around).
Not offered by almost any of the online brokerages. IRS requires you specifically get confirmation from the broker if you do tax-lots- a secure e-mail may or may not be ok – pls check. But there is one brokerage that lets you do this worry-free- check out Wells Fargo’s brokerage.
Wells Trade brokerage’s fee is on par with other brokers as well.
Good luck
Thanks for all the shameless plugs and pans. Appreciate everyone sharing their experiences here.
JM, I agree. One of the reasons why I don’t go full force into trading is because of the record-keeping aspect. If you love accounting, then it should be a small bother. If you’ve got a really good tax guy or financial guy who’ll do some of that work for you, even better. But the whole angle on tax record keeping can be a nuisance if you aren’t well-organized. I’m sure that online brokers realize that this is one aspect of trading/investing that their customers would love to see addressed. It’s only good for their business (and in their best interest) if they can make life easy for the active investor.
While there are those enamored by trading and investing this way, I opt to seclude and designate only a small part of my portfolio for active investing in order to control my risks.
Thanks for the article. options trading volumes is growing rapidly as more and more traders are discovering the flexibility hidden in trading options.
What do you think about Zecco? I hear they are pretty good for new stock traders. I don’t know if all stocks can be traded with them. I am thinking about Mentor Capital (MNTR). I’d like to be able to trade on Zecco.
Zecco has free trade offers and they’re good if you’re after a cheap commission broker. Here’s my take:
If you’re a long term investor, it’s best to go with Scottrade or ETrade. Their support for the long term/buy and hold investor is great: their tools and resources to help you plan your retirement and to help you screen for mutual funds, bonds, indexes and ETFs are comprehensive, especially when compared to other brokerages.
If you are a more active investor, then TradeKing, Zecco, OptionsHouse and OptionsXpress (you can read my review above) may be more for you.
Yes, this is a very good review of options trading tools. Many people are opting for options trading strategies even if they don’t know anything about this field. But with these user friendly tools around, people should simply learn the basics.
Great review. I am now more motivated to actually try some trading with “virtual money”. Seems like a good way to get started. I’ve always been interested in becoming something of a “day trader” or at least making a reasonable income with the stock market. We’ll see…
Binary options trading volumes are growing rapidly. I’m always on the lookout for brokers that support these transactions.
I recently tried to re-activate a long dormant Options Express account. Unfortunately their system does not recognize my new home address. That is odd, because the address is for a home I bought 3 months ago. The house carries an address that has appeared on the Denver tax roles for 87 years, and that exists in the middle of Denver’s urban grid. Why should I trust my money to a company that can’t find an 87 year old address? When I tried to close the account they claim they can’t because they can’t substantiate my new address. To be fair, there is a cumbersome process to get my new address recognized, and it’s not easy.
It is an understatement to say I am no longer impressed with Options Express.
William Skinner, who lives in Denver, whether my address is recognized or not.
@William,
I’m sorry to hear about this mishap. It sounds like an administrative issue — don’t they have “change of address” forms to help you out? I have changed my address a few times and all the brokers and banks I work with easily acknowledge the change with proof of identity.