OptionsXpress Review: Pros and Cons for Beginners
Want to trade options but don’t know where to start? Read our in-depth review to find out why OptionsXpress is one of the best options brokers.
Commissions and Fees
Pros and Cons
- Awesome interactive website
- No fee for broker-assisted trades
- Fantastic visual education resources
- Complex fee schedule
- Stock trading commission somewhat high
Good online broker for traders looking for online resources
When online brokerage sites became a trendy alternative to investing with a traditional broker, Charles Schwab took note and acquired OptionsXpress. The result is a combination of a trusted financial source and easy, less expensive access to investing activities. One visit to the well-designed website should whet your appetite from the get-go with its investor-friendly intuitive homepage.
Like the name suggests, OptionsXpress specializes in trading options, but it also allow you to trade in popular securities such as stocks, bonds, ETFs, futures, and even forex (foreign exchange).
With investor-appetite for online brokerages increasing, CreditDonkey thought an in-depth overview of this brokerage with a specialty would be beneficial for those looking to venture into the marketplace.
OptionsXpress for Beginners
If you've been hankering to trade options for a long time but don't even know what an option is, OptionsXpress has you covered. In fact, Kiplinger called it the “Mecca for Options Buffs.” But if you're not yet a "buff," OptionsXpress has every intention of helping you to become one by offering creative tools exclusive to their site. For instance, if you're one of those folks who doesn't like reading articles and prefers the Gen-Z method of video tutorials, this is the brokerage for you, because they thrive on the video platform. Open an account and you'll have access to videos, webinars, live seminars, and various tools that clearly, sometimes even with a touch of humor, spell out exactly what an option is and how the trading works.
Opening an account is simple and free -- you don't have to have a dime to do it, as there's no minimum balance requirement.
OptionsXpress works on a structured fee schedule and rewards active traders with a nominal discount. This is one place where OptionsXpress can get a little confusing, as, for the most part, there isn't one flat fee per security. There's a bit of fine print reading to be had, but a basic breakdown includes:
- Options: $14.95 flat fee (up to 10 contracts), $1.50 per contract over 10
$12.95 for active traders (up to 10 contracts), $1.25 per contract over 10
- Stocks & ETFs: $8.95 per trade
- Futures: $3.50 per contract
- Bonds: $5.00 per bond/$9.95 minimum
- Mutual Funds: $9.95 plus load fee
Where OptionsXpress really excels is that it does not charge for broker-assisted trades, which can run up to $45 with some online brokerages. If you're a novice and know you'll probably need some assistance initially, this is a huge savings.
RESEARCH AND TOOLS
Again, OptionsXpress is somewhat of an investment brokerage for YouTubers, as its on-demand video library for every level of trader is vast, informative, and sometimes interactive. While many are "how-to" videos helping users utilize the platform, others are tutorials that can assist active traders on their investment strategy to get them to a more favorable position in the market. Its All-In-One Trade Ticket is relatively self-explanatory — trade and see all your investments on a single computer screen. Its Strategy Scan is geared towards helping you make options choices based on your risk tolerance. And its real-time quote streaming of Options Chains — a clear listing of put and call strike prices for a given maturity period — is invaluable for any investor in the options market.
To kick it up a notch, OptionsXpress also offers live seminars and webinars on topics such as trading strategies and the market outlook. In addition, streaming charts, trading patterns and Idea Hub (explained below) are some of the tools available to help you make an informed investment decision and minimize risk. Its unique Virtual Trading platform even allows you to eliminate risk completely by providing you with fake cash to test the waters of online investing before you go all-in for real.
While several online brokerages, including E-Trade and TradeKing, give you virtual money to trade in forex so you can see if it's a fit for you, OptionsXpress takes it one step further and offers you $25,000 in virtual cash to try your hand at the overall investment game. Remember, self-directed investing is risky, especially for novices, so what better way to see if you have a knack for it than playing with someone else's (fake) money? There's nothing like real hands-on experience, and OptionsXpress invites you to dive right in. Even if you decide not to take the plunge and invest with real money, at least you had some time to have a little online fun.
For those investors looking to accelerate into the options-specific market full-speed ahead, OptionsXpress offers its exclusive Idea Hub platform which provides investing ideas based on risk, earnings, and income-based strategies. It's unique and easy-to-digest graphing system gives you a full-screen overview of many options all on one page, and is designed to help you invest quickly with just a click of the mouse if you're tempted to trade in a flash. Before you make that trade, you can view profit and loss and probability charts before giving the OK.
Most online brokerages offer mobile apps so you can trade on the go, and OptionsXpress is no different. It has an app for both the iPhone and iPad, as well as Android devices. The mobile platform is similar to others such as E-Trade and TradeKing and will supply you with real-time quotes and news and the ability to trade remotely. You also get access to options and futures trading. While the mobile app isn't seamless, it does get 3 out of 5 stars by users on iTunes, while Android users have rated it 4.1 out of 5, all of which implies that the app functions pretty well.
Another feature that deserves its own category is its live, in-person workshops run by the dedicated OptionsXpress education team. Currently, it offers seminars in Los Angeles, Seattle, and San Diego, where you can meet financial professionals, ask questions, and interact with people like yourself. But don't despair if you don't live in a major city — the free interactive webinar will allow the professionals to coach you right in your home office no matter where you're located.
Futures are traded in the global commodities market, and because of this, OptionsXpress offers you 24-hour trading, even when the markets are closed. The ability to trade electronically is a plus given the liquidity and fast-action of some markets, and you can trade long- or short-term. As with all their security resources, you get education, tools and seminars geared towards futures trading if you're unsure if it's something you want to dive into. A list of the products you can invest in is laid out on their website, so if you're a chocolate lover and want to start making some money off your cravings, you'll be able to do so by investing in cocoa via OptionsXpress.
If you're looking to trade in the high-risk arena of penny stocks (also known as pink sheets or OTCBB), OptionsXpress allows you to do so. OptionsXpress and the SEC define "penny stocks" as any stock below $5 share. You can also trade penny options, at $4.95 for up to 10 contracts ($0.50 per contract for 10+).
Whether you're looking to travel around the world, relax in your backyard or merely live out your golden years without worrying about your food bill, saving for retirement is always a good choice — especially when you've invested well and your cash continues to grow. OptionsXpress offers you seven different IRA choices, including the Traditional and Roth IRAs, as well as options to purchase one for your children or grandchildren. It also offers an IRA not often available on other online trading platforms, the SEP IRA — a retirement plan for the self-employed or owners of small companies.
OptionsXpress vs Thinkorswim
While OptionsXpress and Thinkorswim by TD Ameritrade both specialize in options trading, one of the differences that pops out at you right away is their broker-assisted fees, which weigh in at a whopping $44.99 plus 75 cents per contract, as opposed to no broker-assisted fee at all from OptionsXpress. Plus, no-load mutual funds will run you almost $50 if you trade with Thinkorswim. Based on these two fees alone, it seems obvious that the better choice in this case is OptionsXpress.
OptionsXpress vs Merrill Edge
Merrill Edge offers a lower price per trade at $6.95 each, a savings of $2 per trade via OptionsXpress. However, once again, that broker-assisted fee will get you, as Merrill Edge will hit you with almost a $30 charge, while OptionsXpress will charge you nothing.
OptionsXpress vs Vanguard
A quick visit to Vanguard's website might overwhelm the novice investor, as it's a bit dense and difficult to navigate. Given the OptionsXpress great online platform, it wins this one hands-down. Vanguard also has a complicated tiered fee schedule, and while one of its plusses is that you don't pay any fee at all on Vanguard ETFs, you'll pay $7 per trade of any stock up to 25 trades, and then, rather than being rewarded for being an active trader, you'll pay $20 per trade on anything thereafter (for accounts with less than $50,000 invested). OptionsXpress takes the exact opposite stance and lowers your fee the more you trade, so if you're an active trader, stick with OptionsXpress.
OptionsXpress vs ETrade
As an industry leader, E-Trade has a plethora of resources and tools at your disposal and can easily rival OptionsXpress. You'll need a minimum of $500 to open an account, while OptionsXpress requires no minimum at all. If you're torn between using E-Trade or OptionsXpress, it might turn out to be a "taster's choice," depending on what your investment needs are. To help you decide, it might be worth checking out CreditDonkey's E-Trade review so you can compare apples to apples.
Benefits and Features
|Stock Trading||$6.95 per trade|
$4.95 per trade if you make 30+ trades a quarter
|Options Trading||$1.25 per contract; $12.95 minimum||$6.95 + $0.75 per contract|
$4.95 + $0.50 per contract if you make 30+ trades a quarter
|Mutual Fund Trading||$0 for no-load, no-transaction-fee funds|
$19.99 for transaction-fee funds
|Commission Free ETFs||Over 200 including Schwab Market-Cap Index ETFs and Schwab Fundamental Index ETFs.||118 including ETFs from WisdomTree, Global X Funds, and db-X Deutsche Bank|
|Broker Assisted Trades||No broker assistance fees (beyond regular commission)|
|Minimum Deposit||$500 for brokerage accounts|
No account minimum for retirement accounts
|Banking||Checking account offers no minimum balance requirements, free online bill pay, and unlimited debit card and check transactions.|
|Desktop App||E*TRADE Pro (requires you execute at least 30 trades during a calendar quarter or maintain brokerage account balance of at least $250,000)|
|Forex Trading||$0 (optionsXpress receives compensation through the bid/ask spread)|
|Customer Service||(888) 280-8020 (Monday to Friday 9am to 8pm Eastern)|
|Online Community||Message board and options/futures blog||ETrade Community lets you exchange trading and investing ideas with other ETrade customers.|
|Seminars||Free webinars and local workshops at Schwab branch offices||Live events and educational seminars at local branches.|
|Virtual Trading||Free $25,000 virtual trading account allows you to practice trading stocks, options and futures.|
|Commissions and Fees|
|Ease of Use|
Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.
OptionsXpress: Pricing information from published website as of 01/19/2015
E*TRADE: Pricing information from published website as of 03/13/2017
OptionsXpress Pros and Cons
- Awesome interactive website
- No fee for broker-assisted trades
- Fantastic visual education resources
- Fee schedule more complex
- Price per stock and ETF trading somewhat high
BOTTOM LINE: Why OptionsXpress
Whether you're specifically focused on options trading or other securities, you really can't go wrong with choosing OptionsXpress. It's ranked highly by several financial magazines, is fairly priced for both the active and sporadic trader, and it gives you a ton of resources at your disposal. Its interactive videos are unmatched in the online brokerage game, and are certain to be a lure for both seasoned and young investors alike.
Cynthia Cohen is a retail analyst at CreditDonkey, a stock broker comparison and financial education website. Write to Cynthia Cohen at firstname.lastname@example.org. Our data-driven analysis has been recognized by major news outlets across the country and has helped families make savvy financial and lifestyle decisions.
Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.
More from CreditDonkey: