eOption Review - Who is eOption the Best For?
Update July 2017: Since earlier this year eOption has been running a daily market insights blog - you might want to check it out here.
eOption is an online trading platform and brokerage that is renowned for its low-cost trading for stocks and options. But does that come at a price? In this eOptions review, we intend to find that out.
We cover everything you need to know about eOption from commissions and fees to tools and usability of the platform itself in an impartial, honest way.
Is eOption the best platform for you? By the end of this review you will have all the information you need to answer that question.
Slick Bucks rating:
eOption is known as an extremely low-cost stock and options trading platform, suitable for all levels of trader from beginner to advanced.
Based in the Illinois, USA, eOption is primarily geared towards American traders, but is open to those from other countries, too.
Ever since going live in 2007, eOption has grown from strength to strength and is now a leading name in the trading industry. It can’t be denied that the costs are some of the lowest in the world of online trading, with just $3 per stock and options trade and 15 cents per contract being the two main prices to pay attention to.
Who Should Consider It
eOption can be for everyone, but who is it the best for? Let’s find out.
- Traders Seeking Low Fees - As we said previously, eOption has some of the lowest fees in the entire industry. Fee-conscious traders should definitely consider it.
- Auto Traders - If you like using auto trade tools, eOption makes that possible. You can make your decisions according to newsletters or other alerts, and set trades up to execute or close in accordance with specific signals.
- Margin Traders - eOption has some of the lowest margin costs in the industry, with 5.25% available on accounts with balances of $49,999 or less.
- Options Traders - As the name might suggest, eOption is best for options traders.
It is difficult to say which level of trader eOption is best for. It has very little in the way of educational resources or support, indicating that it is not really suitable for new traders, yet it also doesn’t offer any of the advanced level tools that many other platforms like Interactive Brokers or SpeedTrader offers.
We would say traders somewhere in the middle are best suited to eOption.
Likes & Dislikes
No platform is perfect, and eOption is no exception to that rule. Here’s a quick rundown of some things we like about it, and some things we don’t.
- Low Minimum Deposit for US Traders - Traders living in the USA can get started for as little as $500.
- Low Costs - You will be hard pushed to find a lower cost broker online.
- Extended Trading Hours - You will need to call in to place these orders, but you can do so between 09:00-09:30 and 16:00-17:00 EST. Call 1-888-793-5333 to place trades during these times.
- Ease of Use - Due to its simple design and user-friendly layout, eOption’s platform is very easy to use.
- High Minimum for International Traders - If you aren’t resident in the USA, you will need $5000 to get started.
- Limited Research Tools - You are largely on your own when it comes to researching stocks and other securities.
- No Commission-Free ETFs - Trading ETFs won’t come commission-free as at many other brokerages. ETF traders would be better off elsewhere.
- Mutual Funds Trading Fees - Every mutual fund transaction will cost $15. This can add up quickly.
- Basic Overall - There are some pretty advanced trading tools out there, but you won’t find them at eOption. The whole platform, in fact, is rather basic.
You can trade a fair number of securities at eOption, including:
- Stocks - Access stock markets all over the world from the NYSE to the NIKKEI. Stock trades can be placed for just $3.
- Bonds - Government, municipal, and corporate bonds can all be traded on eOption.
- Mutual Funds - If you’re thinking long-term mutual funds can be a great way to invest. Remember, these are not fee-free.
- ETFs - ETFs provide an easy way to access a large range of securities from stocks to commodities, to currencies, without having to actually own the underlying asset. Note, these are not commission-free at eOption.
- Options - eOption allows you to trade options on just about anything from stocks to bonds, to IRAs. These are seriously low cost to trade.
This is a very decent range of securities encompassing both US and international markets. It would be nice to see forex added to the list and forex traders will probably want to look elsewhere, but what is on offer is enough to suit most traders.
eOption is renowned for its low fees and commissions, and the following is a summary of the fees you will incur for using the various services it offers.
- Stock Trades - Fixed $3 fee. Broker assisted trades are $9. International stocks will cost $39.
- Options Trades - $3 per trade, 15 cents per contract. Again, for broker assisted trades add $9.
- Extended Hours Fees - Trading outside regular hours will mean an extra $25 fee for up to 5,000 shares and an additional $0.003 per share thereafter.
- Mutual Funds Trades - These will cost $15 per trade.
- Bond Trading Fees - Your first 25 bonds will cost $5 per bond, and any bonds you trade thereafter will cost $3 per trade.
- Auto Trading Fees - Trading equities will cost you $5 per trade and options will cost $5 + 0.15 per contract.
Do look out for the fees associated with ETF and mutual funds trading. These are commission-free at many other brokerages (for example at TD Ameritrade), but not at eOption.
As you can see, these are some of the lowest fees you will find anywhere, except when it comes to mutual funds and ETF trading. All traders will benefit from these fees with the exception of the specific two mentioned.
One of the big pluses for eOption is how easy it is to use the platform. It is very well-organized and even if you are new to trading, it will be intuitively easy to find your way around.
When you first log in you will see that there are 7 distinct tabs across the top, and you will automatically default to the stocks tab where you will see your watchlist, a graph for any selected stock below that, and all relevant news in a list form to the right-hand side. If you click on a stock on your watchlist, the chart will change to reflect that stock.
The next tab is the charts tab, which allows you to bring up charts on various securities and plot technical indicators on them. We will take a closer look at the eOptions charts later, but for now, suffice to say they are good.
Next along the top is the research tab. You can see some fundamentals and analyst reports here, but the research tools are limited, contrary to brokerages where there's heavy emphasis on research.
Another tab is options chains. Unless you are already familiar with options this may overwhelm you, but this is where you will find options data and be able to execute options trades directly.
The next tab is the trade tab. You will see your trade and options tickets, which allow you to place trades directly, and you will also see your account information as well as a summary of any current orders and open positions.
As touched on previously, the eOptions platform is expertly designed for ease of use and convenience.
Everything is organized in tabs according to category, trades can be placed from multiple places to allow for quick action, and you can quickly and easily find what you are looking for.
Our only criticism is it could be a little brighter. It’s all dark blue and black. A few primary colours or theme color variations wouldn’t hurt.
It can also be a little clunky, meaning slow to switch from one tab to another. That's all a matter of preference though.
There aren’t tons of customization options available, but you can pretty much change all of the charts and indicators to suit your trading style and the securities you are interested in. Just click the small gear icon in any window to do so.
You can also change the colours of the data plotted on your charts, which is nice.
The customization options could definitely be better, and some other platforms allow you to drag, drop, and eliminate windows and modules, which would be nice to see from eOption in the future.
The eOption mobile platform is excellent and allows you most of the same functions as the desktop and trading station. The layout is obviously different, but the same functions are all there.
Some of the mobile functions include accessing all of your relevant account information, full charting capabilities with a handy mobile view, being able to view your orders, open position and account history, and the ability to access real-time news, charts, quotes, and other data.
This is one of the better mobile trading platforms we have encountered. There’s very little we could say to criticize it.
It’s not exactly ground-breaking, but one of the unique features at eOption is its auto trading feature. Autotrading has been done before, but eOption brings a new twist to it.
This feature allows you to automatically execute trades from a newsletter of your choosing while retaining full control over how much is traded per day by setting a dollar amount, a percentage of overall capital, or a maximum number of orders.
You can set up alerts based on any newsletter, for example, The Options Prophet newsletter, and eOption will execute those trades for you.
This is a great way to ensure you don’t miss out on any potential profits, but is is also risky and leaves you open to taking losses, albeit limited ones. Proceed with extreme caution if you do decide to use auto trading and that on whatever platform you decide to use.
When you first log into your eOption account you will automatically default to the stocks tab.
To place an order, click the ‘trade’ tab along the top and you will see your order tickets for both options and other securities. It is here that you can place order, although you can also do so from the options chains tab directly.
To do this for options, you will need to click once to buy and twice to sell, after which you will see a ‘trade’ icon appear. It is much easier and simple to trade options this way.
Once you have filled in the order ticket with the symbol, the number of shares or units you want to trade, and stop loss, you can then click buy or sell to place an order. After that, all you need to do is to verify the order.
It’s a very simple process and the whole thing takes just a couple of seconds from when you log in.
The charts on eOption are one of its strengths, and they are versatile, detailed, customizable, and user-friendly.
To customize, click the little gear icon on the relevant chart.
Charts available include candlesticks, bars, and standard line graphs, and you can customize these according to the period of time you want to view, the technical indicators you want to plot on them (you can change the colour for each). You can also compare two securities on one chart.
There is very little else you could expect from a charting suite on a trading platform, but it would be nice to be able to change the screen around, for example, to have multiple charts open for different securities at the same time.
The research tools available at eOption are rather basic, and you won’t find many of the advanced research tools available at some other brokerages online.
eOption provides you with the ability to see real-time charts, retrieve the latest quotes, news, and company financial data, and access fundamental information like financial filings and reports.
Though overall it's not the worst, in our opinion there is room for improvement.
The customer support at eOption is, on the whole, quite good, but the hours of availability are limited and there is no live chat feature, which could come handy.
You can reach the eOptions team on the telephone or via e-mail from 08:00-20:00 EST from Monday to Friday.
It’s a shame the availability isn’t better, but this again smacks of a US-centric brokerage and leaves international traders out in the cold. It is also basically essential to have a live chat feature these days, and the fact one isn’t available is poor, to say the least.
There are some online classes about options trading and a few webcasts and podcasts to kick things off, but these are pretty basic and brief.
Again, this is poor compared to some of the fantastic education sections available elsewhere, such as in TradeKing. eOption has a lot of work to do in this area.
However, if you are looking to learn about options, this is the part where eOption excels. Educational content is offered by the Options Industry Council, making this particular educational center one of the most reliable ones in terms of learning about options.
Our eOption Review Final Verdict
eOption could be brilliant or not so great, depending on what type of trader you are and what you hope to get out of an online trading platform.
Those seeking low-cost trading who don’t require educational support or advanced tools (perhaps you have access to your own suite of tools) will find eOption to be a fantastic choice, provided forex trading isn’t a priority.
Beginners will find the platform itself easy to use but if you’re a total beginner and want to trade stocks rather than options, it is probably best to consider eToro instead (in case you are not from U.S.)
As you can see, there is no simple answer as to what the verdict should be on eOption. You will have to decide for yourself. There are pros and cons to the platform, and it really does depend on what you’re looking for.