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November 11, 2015

Online Stock Trading

optionsXpress Review

By focusing on options and futures traders who want access to powerful trading tools, optionsXpress has carved out a niche as a popular specialized broker. As a Charles Schwab subsidiary that operates as a stand-alone entity, optionsXpress offers access to investment products that Charles Schwab does not offer, which continues to make them a relevant force in the industry.

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The Good

Industry-leading options tools

OptionsXpress provides some of the best options trading tools in the industry, designed to help you identify and analyze opportunities, execute trades, and monitor your options portfolio. Xtend, the company's primary trading platform, provides continually updated market information and easy access to a variety of powerful research and analysis tools. The Dragon, an investment search tool, helps you track down the options that best fit your investment criteria. To automate your search, you can use The Screener to continually canvas the market for new trading opportunities. If you're still working out your investment strategy, fire up StrategyScan, a tool that helps you identify an investment strategy that fits your goals, trading experience, and risk level. Whether you're a beginner in options trading or a seasoned veteran, optionsXpress offers a number of proprietary tools to help you take full advantage of market opportunities.

Superior mobile trading app

The OX Mobile app puts key features of the optionsXpress trading platform in the palm of your hand. Available for all major smartphone platforms, this app allows you to monitor live market data, check your watch lists, execute trades, and manage your account wherever you go. You can even access powerful charting tools and track down investment opportunities with The Dragon search tool. Though the OX Mobile app does not provide a virtual trading function like the apps offered by some other brokers, it still ranks near the top of the industry, garnering very strong reviews from its users.

No minimum to open an account

One big plus for prospective clients is that optionsXpress doesn't require you to make an initial deposit to open an account. This means you can get right into the company's trading platform to do some hands-on testing and take a look through the research materials without any financial commitment. Whether you're new to trading or just new to optionsXpress, the ability to open an account with no investment is a nice feature to have that not even their parent company, Charles Schwab, can claim.

$25,000 virtual trading account

In another offering to new traders, optionsXpress will provide you with a fake money account that allows you to carry out trades with $25,000 in virtual cash. With full access to all of the company's trading and analysis tools, research materials, and educational resources, you can really put optionsXpress to the test. This is especially important for new traders, since you are able to build up your expertise and test out your investment strategies without putting any of your money on the line.

Access to quality educational materials

Strong educational materials are key to learning how to use a new trading platform effectively and to mastering general trading skills and advanced trading strategies. The good news is that optionsXpress has a clear commitment to educating clients by offering resources for traders at all skill levels. The company's online Education Center places an extensive collection of articles, on-demand video tutorials, and webinar courses right at your fingertips. Beginners will really appreciate the video tutorials designed to walk you through the ins and outs of the optionsXpress trading platform, which will help you get started trading in no time at all.

No base fee for trading options

Unlike some of their competitors, optionsXpress doesn't charge any base fees on options trades. Other leading brokers assess a base fee of up to $9.99 on every options trade, in addition to $0.75 for each options contract per trade. Though optionsXpress only assesses fees on the number of contracts included in a trade, you do have to pay a minimum fee for each options trade you make.

Free Investor's Business Daily subscription with account

A cool added bonus for new optionsXpress clients is a free 13-month subscription to the electronic edition of the Investor's Business Daily newspaper, which is a trusted resource for timely investment news and analysis. Alongside the optionsXpress daily newsletters full of market news and analysis, your Investor's Business Daily subscription will help ensure that you stay on top of important events that may affect your investment positions.

The Bad

High options contract fee with a required minimum

If you plan to trade options at a high volume, optionsXpress is not the ideal broker for you. The company has two fee tiers depending on the number of options trades you execute in a quarter. If you make fewer than 35 options trades per quarter, you pay $1.50 per contract with a $14.95 minimum per trade. If you make more than 35 options trades per quarter, you qualify for the Active Trader rate and pay $1.25 per contract with a $12.95 minimum charge per trade. Both tiers can be quite expensive for high-volume traders due to the high price per contract. For example, OptionsHouse, a main competitor, charges a base fee of $8.95 for a trade plus only $0.15 for each contract involved in the trade. For traders who want to trade a large volume of options contracts, the difference in fees can be substantial.

24-hour support only available for futures traders

Though optionsXpress offers full daytime telephone and online chat support services during the week, only futures traders can access this support 24 hours per day. This makes sense, as many futures exchanges operate around the clock, while U.S. stock and options markets operate only during daytime hours. That said, it would certainly be nice if optionsXpress extended the convenience of 24-hour support to all of its traders.

Lacking some financial resources

OptionsXpress isn't your best option if you're looking for a broker that offers comprehensive financial resources, like banking and credit or debit cards. To be fair, optionsXpress is a trading specialist and doesn't present itself as a full-service broker. In fact, the company advises clients who need comprehensive financial services to access them through their parent company, Charles Schwab. While this is certainly an option for you, it requires opening a new account with Charles Schwab, which may be more trouble than you're looking for.

The Details

Trading Costs and Fees

  • Broker Assisted Trades: $0
  • Futures Contract Fee: $3.50
  • Maintenance Fees: $0
  • Margin Rates: 6-8.25%
  • Minimum Account Balance Fee: $0
  • Mutual Funds Fee - Load: $9.95
  • Mutual Funds Fee - No-Load: $9.95
  • Options Contract Price: $1.25 - $1.50
  • Options Flat Fee: $12.90 - $14.94
  • Stock Flat Fee: $8.95

Other Fees

  • ACH/EFT Withdrawal: $20
  • Bounced Check: $20
  • Check Withdrawal: $20
  • Domestic Wire Withdrawal: $15
  • Forced Margin Sellout: $0
  • Full Account Transfer: $60
  • IRA Annual Fee: $0
  • Partial Account Transfer: $0
  • Stop Payment on Check: $15
  • Telephone Orders: $0

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