OptionsXpress Review: Application, Broker Commissions, Trading Features, $100 Bonus

OptionsXpress.com (OX) is a online brokerage site that specialized in options and futures trading, but has since expanded their offering to be one-stop-shop – offering stocks, bonds, brokered CDs, and mutual funds. Like some of you, I signed up a while back when they were offering a fat bonus (very limited-time offer). Since I have an account, here’s a user’s review of the broker.

Application

The online application is of the usual brokerage sort, with questions about your job, trading style, and any potential conflicts of interest. You can fill in most of your details online but you must still mail in a signed form to start trading. There is no minimum opening balance required for a cash account ($2,000 min for margin), but you can fund initially via electronic transfer, wire, or check.

Commissions and Fees

Stocks and ETFs are $9.95 per trade (market or limit, up to 1,000 shares), which is basically average now in the discount broker world. Broker-assisted trades are no additional charge, which is nice. Mutual fund trades are also $9.95.

Where OX is more competitive is in the options trading area. On their lower tier (0–34 trades/quarter), you can get 10 contracts for $15 with no base rate. They say that the average options trader trades 20 times a year, 10 lots at a time. Here’s their graphic how that stacks up:

No minimum account balances, no account maintenance fees, and no inactivity fees. Streaming real-time quotes are also free.

Cash Management

OX has a basic and functional ACH funds transfer system for electronic transfers to a linked bank account, which is free for deposits and withdrawals. You can add additional linked banks online via the trial deposit method. All ACH deposit requests must be received by 3:30pm ET to be processed same business day. All other requests will be processed on the following business day. ACH deposits will be available for trading on the third business day after processing. If you send them actual bank statement, you can arrange for next-business day availability of funds.

Free checkwriting is available on accounts open at least 6 weeks with $5000 minimum equity balance.

Their FDIC-insured cash sweep account currently yields a tiny 0.02%, but sadly that’s also about average for the industry right now.

Features

While they aren’t the cheapest, here are some features that differentiate them.

MyOX
If you are a very active trader, you are familiar with proprietary software by software-based brokers. MyOX works inside a regular web browser, but still enables you to customize the trading interface with widgets that you prefer. The best way to describe it is if you use iGoogle where you can move around modules with drag-and-drop. You can have your watchlist, charts, RSS news fees, etc. Here’s a screenshot of how I had mine set up:

Customer Service
OX offers live chat Mon-Fri, 8am-10pm ET and Sat, 10am-2pm ET which is much later than market hours. Their general support line (888) 280-8020 is also open until 10pm Eastern. I don’t live on the East Coast so I found this very convenient.

XpressRouter – Improved Order Routing
A big concern when you go with a discount broker is the getting the best execution of your orders. How do you know you couldn’t have gotten $45.25 per share instead of $45.18? Times 100 shares, that’s $7 right there. They use what they call XpressRouter to routing your trade between several options and get the best execution. NBBO is National Best Bid and Offer.

At optionsXpress, you can be sure to get the NBBO on any eligible trade. We guarantee the best price or we’ll credit your commission. If you see a possible discrepancy, let us know immediately after you get the electronic confirmation of the execution. Our commitment is to provide the quickest execution at a reasonable price so you can trade with confidence.

$100 Sign-Up Bonus
OptionsXpress has a current promotion offering new customers a $100 bonus if they open an account with at least $500 and make 3 trades with a year.

Offer is valid for one new Individual or Joint optionsXpress account opened and funded with at least $500 by US residents on or before December 31, 2011 at 11:59 CST, and having executed 3 trades within twelve months of account opening. To receive $100 bonus, account must be funded with at least $500 cash or securities transferred from a brokerage firm other than optionsXpress. The $100 bonus will be deposited into the new optionsXpress account within one month after meeting the terms and conditions of this offer. optionsXpress may charge the account for the cost of the $100 bonus should account fail to remain open with minimum funding (excluding trading losses) 6 months from the account open date.

Since their overall price structure isn’t rock bottom, this bonus it will let you open an account and trade several options contracts for free to see if you like it.

Comments

  1. I use TD Ameritrade and their commissions for stock are identical. However, TD’s options commissions are considerably higher at $19.95 plus $.75 per contract. For 10 contracts, that’s almost (not quite) 2x Options Express.

  2. The author of this blog did not seem to me like a trader. In such a case there is a better option. I am using WellsFargo PMA Package for my investments for about an year now. To start with I am not a trader, but invest substantial amount of my savings in stocks. This account met all of my needs saving few hundred bucks on brokerages so far.
    – It needs $25,000 minimum combined balance between checking, loans, savings and brokerage accounts. Best part is that the value of the shares in the account counts towards the combined balance. Based on the criteria, it is easy to meet the requirement.
    – I also looked at similar account offered by Bank of America. But they did not count value of the stocks to meet combined balance needs. They count only deposits and loans and that did not sound bad either. But this was a better deal.
    – I am not active trader. So I cannot speak about execution speed etc. No way I will really be able to verify whether I got best execution price fro my trade, except to believe what my broker is claiming (which is pretty much the same claim by most brokers these days. )
    – When ever I called customer service, the response was good and the issue was resolved
    – This package provides 100 free trades per account per year. Btwn my brokerage, a joint brokerage account with my wife and an IRA account I get 300 free trades. Not that, I use all of those.
    – I think the cost per trade is $5 after first 100 trades… not sure though
    – Options trades are expensive $10 or something like that
    – The S&P stock reports and stock profile info provided are good enough for me. I have seen sophisticated stock information lots of ratio’s, charts etc on some other brokerage accounts, but to be frank I do not know how to use all that information to make profits… so I do not care.
    – Last year I filed tax return using Turotax. The software imported all of my trade information seamlessly saving me lot of time. I did not have the same luck with the brokerage from which I moved to WellsFargo.
    – Capital gains and tax information provided is good enough. One useful information is one of the portfolio screens is the “Estimated Annual Income”. This provides the actual dividend income I am going to get instead of just showing the yield. It is not going to be accurate as the dividend payout rates change, but found to be a useful projection for myself.
    – Screen navigation in general is not intuitive and money transfer is little confusing. It’s a pain to navigate the documents screens like tax documents etc.

    Over all I am a satisfied customer with the $ savings even though I have minor gripes.

  3. Another point – WellsFargo pays next to nothing for cash balances. I use other online bank accounts for deposits and savings accounts.

  4. Radha, OX really is geared more towards options traders, especially those buying or selling large number of contracts.

    Johnathan, I am so happy I opened my brokerage through the Zecco promo code on your blog. I still get 10 free stock trades a month, and I can buy or sell options at $4.50 + $0.50per contract. For ten contracts, that’s a measly $9.50!!!!!!! Lousy research tools though, but very cheap for your average call and put writing or buying.

  5. This is just a review of the brokerage, I have an account at WellsTrade as well that I’m going to put up a review of shortly. I do agree with many of your points about WellsTrade @radha.

    @Prashant – Glad you are enjoying Zecco, they are definitely great on the commissions.

  6. If you are an options trader, I haven’t seen any better application / trader than thinkorswim (thinkorswim.com). You should be really into Options though to take advantage of all the nity gritty of trading them. e.g. understand all the greeks, various strategies, etc. If you are familair with it – TOS platform is a Ferrarri compared to other “Honda/Toyota/Ford” apps :)

    Note: No affiliation to TOS – just a satisfied customer.

  7. What’s the minimum funding for an individual account?

  8. Don’t use them, they’re the worst so far.

    I transfered funds from my husband’s bank account to my optionsxpress account by mistake, but they assured me they would be returned 10 days ago. then it didn’t happen. I chased them for 10 days every day and they give me the same answer, saying they would inform their bank to start the transfer, the process had been delayed by their bank.

    I communicated with them through live chat and called them, everything they said the funds would be returned and they have spoken to the cashier department, but next time I spoke to the support team they told me the same story. I will consider legal actions against them for negligence and unreasonable delay.

Trackbacks

  1. [...] OptionsXpress still has their $100 sign-up bonus offer live, so if you want a Chuck Schwab account, this way you’ll get a bonus for joining. Here’s a link to my perhaps-soon-to-be-stale OptionsXpress review. [...]

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