OptionsXpress Review

Section 1: Web Site Functionality

Navigation
OptionsXpress is an industry leader in the navigation category. Their site is fun and easy to navigate, everything is well organized and the entire site has a consistent design and appearance so you can get comfortable quickly.

This site faces a problem that other brokerages wish they had, OptionsXpress has an enormous number of features and tools available to every client and some of them are complex, especially those that deal with advanced options trading. Don't worry, they have great education materials and step-by-step walkthroughs and all of them are intelligently placed, you won't have any trouble finding help when and where you need it.

Dependability
Any brokerage that works with a lot of daytraders and options traders better have dependable service. OptionsXpress doesn't let clients down in this category. You won't have to worry about site crashes or long service outages, they are one of the market leaders in dependability.

Customization
Every page can be customized. When you log in, it feels like you're logging into your own personal trading platform. Creating your account overview page (basically your homepage) is very easy, you just drag and drop your favorite modules around the screen. They also don't make your main page overly complex, which is refreshing for an options specialty site. You can go to the greeks, analysis or charting areas whenever you want but the home page is clean and simple.

These customization options are the kind of thoughtful extras that win OptionsXpress usability awards year after year. You'll find that most of the pages and tools can be personalized, you really can create your own trading experience on this site.

Trade Execution
OptionsXpress doesn't state any trade guarantee. This was surprising because most of their clients are daytraders and options traders that are much more dependent on fast and accurate executions than long-term traders. However, we didn't find any complaints about slow execution or at pricing inconsistencies so there are no issues, it's just odd not to offer a guarantee if you're going to specialize in short term trading strategies.

Section 2: Trading Costs and Fees

Intuitive Commission Structure?
Pretty straightforward. OptionsXpress offers fair and consistent pricing with no hidden fees, a rarity for a brokerage that specializes in Options trading. This is also the only brokerage we reviewed that doesn't charge extra for broker assisted orders, a very nice perk.

Minimum to Open an Account
No minimum required to open an account but a $2,000 minimum to maintain a margin account.

Stocks

Internet Trades = $9.95 per trade up to 1,000 shares. Or $0.01 per share over 1,000 shares.
Broker Assisted = No additional charge.

Options

1-10 Contracts
Internet Trades = Whether you buy 1 or 10 contracts, you pay a flat $12.95 fee for the transaction, no additional per contract charge. Tip: Buy 10 contracts at a time and this beats most competitors.
Interactive Voice System = No additional charge.

Broker Assisted = No additional charge.

20 Contracts
Internet Trades = Flat $25.00 fee, no additional per contract charge.
Interactive Voice System = No additional charge.

Broker Assisted = No additional charge.

Mutual Funds

No-Load No-Fee Funds = Not available.
No-Load Funds = $14.95 transaction fee charged by OptionsXpress (3000 available)
Load and Fee Funds = Fees charged by mutual fund and possibly by OptionsXpress as well
Tip: Avoid any funds with loads or fees. With the vast selection of no-load no-fee offered by many of today's online brokerages, there's no reason to ever pay them!

Treasuries & Bonds

Treasuries, Bonds and CDs = $5 each, $14.95 minimum
Exercise or Assignment = $9.95

Tip: Don't let the name fool you, OptionsXpress has a wide variety of bond and treasury products.

Section 3: Customer Service

Phone Reps

Every OptionsXpress phone rep we talked to was knowledgeable and friendly. They were able to answer almost every question immediately and they were back on the line very quickly on the rare occasion they needed to research before answering.
Wait times were short, all of our calls went through quickly.

Support hours are very limited right now, but during our survey calls, reps said that they are about to expand hours. They will expand Monday through Friday support from 9AM-5PM to 9AM-10PM. This will add some much needed flexibility, many online investors can't use phone support until they're home from work in the evenings.

Online Support

Live chat support is a great perk and OptionsXpress was one of the first in the industry to offer this helpful service. Hours for live chat are Mon-Fri 8AM-7PM and Sat 10AM-2PM. They also have a great FAQs section but with all of the education material and step-by-step guides available you won't need it often.

Advanced Support (Options, Funds, Bonds, etc.)

They have great live support for options trading but you won't find the fund, bond, or advanced planning specialists that are available at some of the higher end sites. They do, however, provide the best options support in the industry. The advisor we spoke to was able to answer every question we could think of and was even kind enough to explain exactly how to create an Iron Condor option trade on the SPX index.

Section 4: Research Tools & Investing Information

Market Research

When you compare OptionsXpress to competitors in the research category they come up short. They don't offer near as much basic trading information and don't provide access to many 3rd party experts. They do offer some news resources but only enough to help you keep up with the latest trends and hottest stocks, there's no in-depth research.

However, they shine in the Options category. Derivatives trading is complex and risky, you can lose a lot of money very fast. Most new option traders don't last very long even if they are experienced traders because they either receive very little or very poor training. After a few big losses, most run back to the safety of traditional investment vehicles such as stocks, bonds and mutual funds.

OptionsXpress has taken on the daunting challenge of trying to educate beginning options traders. Even though they offer traditional products, nearly all of their educational material and trading tools relate to options trading. The business model appears to be working, customers love the site and their account base is growing so they must be pretty good at teaching people to trade options.

Level II Quotes & Streaming Data
Both are available

Special Option Orders

OptionsXpress does a good job of keeping the trading screen clean and simple for basic products like Stocks, ETFs and Mutual Funds. The trickier part is to keep it simple for Option traders and we were impressed with OptionsXpress's solution.

They have designed a powerful proprietary option ordering screen that will allow you to create complex spread and contingent orders with very little expertise. As long as you understand the basics of the option trade you're trying to create, even complex Iron Condor orders will be a snap.

We're emphasizing the option ordering screen because this is a real hassle at most online brokerages. They don't usually support advanced trades and this can force you to “leg” in. Unless you're a very experienced trader, legging in can prove disastrous. The limited flexibility of most sites also creates margin balance headaches since they don't understand what you're trying to do and may refuse to allow you to enter the first leg of your spread. That will never be a problem at OptionsXpress. They can support every kind of option trade we could think of and the margin account calculations are always spot on.
Virtual Trade Platform

We love the paper trading concept, especially for people considering a high risk strategy such as options trading. Virtual Trade Platform allows clients to test any option trading style (spreads, butterflies, straddles, etc) they're interested in before risking real money. This tool reminded us a lot of Schwab's StreetSmart, it's flexible, powerful and easy to use as long as you take the time to read the guide.

Section 5: Perks

No Additional Charge for Broker Assistance

No additional charge for broker assisted trades. This is a first, we haven't seen this offered at any competitor. A very nice perk, hopefully this will catch on.

The Dragon System

Screening tools have become pretty standard at most online brokerages, you can usually count on having free access to a tool that will spit out a list of potential investments based on criteria that you select. Fewer brokerages have additional tools that can analyze the Screener's results and narrow them down to a small list of high potential investments. And only a couple competitors have tools that can take this tiny list and dissect it lots of different ways to help you understand the risks, pros and cons of each investment.

OptionsXpress has all of these tools for Options. If they ever develop tools this good for long-term traders trying to identify high-potential Stocks, Bonds and Mutual Funds, they may become the Microsoft of online investing.

– The first tool in the suite is the Dragon. Dragon allows you to search for specific criteria such as a high put/call ratio to choose your market sentiment and find some broad based trade opportunities.
– Next you go to the Screener. This tool is designed to query the market for options that meet more specific trade criteria. This tool also allows you to download your search results to Excel or save your search criteria for future use.
– Once you're armed with some trades, you move to the Chart pattern tool, which will help you compare to 36 different chart patterns. Not comfortable with chart patterns yet? No problem, this tool can also hunt for a matching pattern to see if your trade has potential.
– Finish your search with the Strategy Scan tool that is designed to translate the info you've gathered into trade suggestions. Strategy Scan can also help you measure the risk involved now, at expiration, and any time period in between.

Browser Toolbar

We haven't seen anything similar to the Online Trading Toolbar at competitors yet but I think we will soon, it's a cool and innovative idea. No matter where you are online, the OptionsXpress Toolbar provides continuous access to your account information, quotes, chains, quotes, charts and even the trading screen. You can also link directly to some of OptionsXpress's more popular tools such as the StrategyScan, Volatility View, or

Section 6: Product Offerings

Retirement Accounts
IRAs, Roth IRAs and personal 401Ks

Education
529, Custodial, and Education Savings Accounts

Managed Account
No

Specialty Accounts
Estate, Trust, Investment Club, and Pension Plans for Small Businesses

Section 7: Security

SIPC Member
Yes. SIPC protects securities in your account up to $500,000.

Firewall Secured and Fraud Protection
Yes. All of the major sites have dependable security. They can't afford to make mistakes, they wouldn't survive a year if they gained a reputation for mishandling money or for lax security.