OptionsXpress Review - Detailed Overview of an Online Discount Broker
OptionsXpress offers a vast library of educational resources to help the beginner learn how to trade and it doesn't charge for broker-assisted trades. It also has plenty of tools to help you find more trading ideas.
However, it can be a little more expensive than its competitors...especially for high-volume options traders.
Overall, OptionsXpress is a great way to buy and sell options, futures, individual stocks, ETFs and mutual funds. In this review, we'll break down it's main characteristics.
Brief Overview
OptionsXpress was originally an independently owned company. But it was bought out by Charles Schwab in 2011.
It's primarily aimed at options and futures traders. But you can still use it to buy other assets as well.
In the past, OptionsXpress was known for their ultra-low commissions for active traders. They had no base fee and offered a discount to customers who traded more than 35 contracts per quarter.
However, most options brokerages have now switched to a per-trade pricing structure. And OptionsXpress has joined the crowd in this respect.
As a result, they are no longer especially cheaper than their competitors for customers that do a lot of trades.
OptionsXpress might be shut down at some point in the future and merged with Charles Schwab completely. So this should be kept in mind if you are going to be using the service for a while.
But if you like it, at least you can enjoy it while it lasts.
Who Should Consider It?
OptionsXpress offers a lot of tools not available elsewhere.
For example, their “walk limit” order type prevents you from having to alter your order if it isn't filled right away. This can sometimes get you a better price than you would receive otherwise.
They also have an “idea hub” that provides you with trading ideas from five different categories. This can help in those moments when you're “stuck” and don't know what to trade.
In addition, they have a very useful trade-calculator that can tell you the probabilities of various profit/loss outcomes.
If you want a platform with more features, OptionsXpress might be the site for you.
OptionsXpress also might be the site for you if you like to trade penny stocks or futures, since many other options platforms do not offer these assets.
On the other hand, OptionsXpress charges $0.65 per contract to trade options instead of the $0.50 charged by OptionsHouse.
If you make mostly low-volume trades, this may not matter to you.
But if you make trades that are very large, the extra 15 cents can significantly eat into your profits. So in this case you may want to stay away from OptionsXpress.
Likes and Dislikes
Likes
Dislikes
- Paper trading available with $25,000 of play money.
- Downloadable platform is fast and easy to use.
- Walk-limit order type eliminates the need to update an options order before being filled.
- Idea Hub and Strategy Scan help to find trade ideas.
- All-in-one trade ticket allows any asset to be traded from one screen.
- No monthly or annual fee to use the trading platform.
- No extra fee for broker-assisted trades.
- Provides some ETFs commission-free.
- $0.65 per contract commission discourages high-volume trades.
- Web-based platform cannot be customized.
- Despite being owned by Charles Schwab, doesn't allow one-click access to a CS account.
- Will probably be shut down. So it may be better to go straight to Charles Schwab.
Investment Offerings
Given the name, it might appear that OptionsXpress is just an options broker. But that's far from the case. OptionsXpress allows you to buy and sell many different assets.
Individual stocks
Individual stocks can be traded for $4.95 per trade. This is better than many traditional stock-brokers charge.
Not only is this useful for the stock day-trader, but it also allows the user to build a passive investing portfolio if desired.
And since OptionsXpress also offers options trading, a stock investor can buy and hedge from the same platform.
ETFs
It offers an assortment of exchange-traded funds. And it has an ETF screener tool that can be used to search for ETFs based on the criterion the user enters.
For example, as user can search for ETFs with a particular MorningStar rating or a particular range of historical performance.
In addition, OptionsXpress offers over 200 Charles Schwab ETFs commission-free.
Mutual Funds
Mutual funds can be bought for $9.95 plus the load fee. But many of OptionsXpress' mutual funds are no-load.
Bonds
For the investor that wants to diversify into fixed-income securities, OptionsXpress offers a wide assortment of government and corporate bonds at a $5 per bond commission with a $9.95 minimum.
And because of the “all-in-one trade ticket”, bonds can be traded from the same screen as other offerings.
Futures
For traders who want to, OptionsXpress allows you to participate in the 24-hour a day, five day a week futures market.
You can bet on the future price of precious metals, coffee, sugar, currencies, interest-rates, stock indexes...pretty much anything you want.
Commissions on futures are $3.95 per trade.
Penny stocks
A lot of options-trading platforms don't offer “pink sheet” stocks, often called “penny stocks”. But OptionsXpress does.
Options
Last but not least, OptionsXpress offers options trading for $4.95 per trade plus $0.65 per contract.
You can buy or sell options on most of the other assets it offers, including individual stocks, ETFs, or futures.
Fees
As I mentioned earlier, the main thing OptionsXpress was known for in the past was the fact that it gave a discount to options traders who traded more than 35 contracts per quarter. This allowed them to attract day-traders, scalpers, and others who tended to be “active traders”.
This is no longer the case. But OptionsXpress' fees are still lower for most traders than they were in the past.
There is now a $4.95 fee tacked onto each trade. But whereas options contracts used to cost $1.25 for active traders, they now cost only $0.65 for everyone. For most traders, this leads to lower fees over the course of a quarter when compared to the past.
However, OptionsXpress' competitors have gone further than them in slashing prices.
For example, OptionsHouse charges the same $4.95 fee per trade but only $0.50 per contract. So OptionsXpress is still slightly more expensive when compared to its competitors.
As a result, if features are less of a concern to you than price, than this will probably be a significant drawback to you.
Platforms and Trading
Web-platform
The OptionsXpress web-platform is very easy to use. Charts can be created by mousing over the “quotes” pull-down menu and clicking on “basic charts”.
This allows you to add moving averages, bollinger bands, or whatever other indicator you want so that you can decide on whether to go long or short.
When you're ready to trade, just mouse over “trade” and click on “all-in-one trade ticket”. It doesn't matter which asset you are trying to trade...they can all be bought or sold from the same window.
The web-platform also has a nice, clean white design that's easy on the eyes. This helps prevent fatigue during those marathon trading sessions when you just can't bring yourself to stop.
The only problem with the web-based platform is that it is not customizable. This can be a problem if you want to watch several charts at the same time.
Luckily, there's another option.
Xtend downloadable platform
In addition to the web-based platform, OptionsXpress offers a downloadable client called “Xtend”. This software is fully customizable.
By default, Xtend opens with an “options chain” window in the top-middle of the screen. Type in a symbol and it will give you a list of the put and call options available, along with their strike prices.
If you want more detail, you can click on the option name to get a popup window with more info about it.
Or alternatively, you can click on the “trade-ticket” window on the bottom of the screen and enter the details of the option to buy it.
By default, the Xtend software also opens up with four other windows: the watch list (upper-left), quote details (lower-left), balances (upper-right), and positions (lower-right).
- Watch list is just what you would imagine. It can be set up to give you quotes on all of your favorite assets at a glance.
- Quotes offers detailed information on one particular asset's price, including a mini chart.
- Balances gives you information about the current equity of your account, pending purchases, how much buying power you have, etc.
- Positions gives you a list of all of your current positions.
These windows can be moved around to wherever you want them to be...until it suits your personal trading style completely.
As far as design is concerned, Xtend has been greatly improved and features very sleek great design.
Mobile Platform
Options Xpress offers a mobile client called “oX” for iPhone, Android, and Kindle. It has a white and blue design and opens with four tabs: Indices, Movers, News, and IdeaHub.
Clicking on “indices” brings up a chart of the DJIA, with an option to switch the chart to SPX, COMP, or VIX instead. If you decide that you want to trade one of these indices, you can immediately click “trade” and enter in your order info.
Since many traders like to trade these four indices exclusively, this is a useful screen for the app to open up to.
Clicking on “movers” gives a list of the biggest moving stocks of the day.
“News” does the obvious, while IdeaHub opens up a menu that gives the user a list of trading ideas (I'll talk more about IdeaHub in the “other features” section below).
Overall, the oX mobile platform makes trading on-the-go pretty easy.
Other Features
Here's a few other features of OptionsXpress that make it unique when compared to other platforms.
Walk Limit
Under normal circumstances, placing an options limit order can be frustrating.
If your order isn't filled at the initial price you select, you may have to change the order several times until you can get it to fill.
The walk limit order allows the computer to automatically update your order until it is filled.
Because this is so much faster than doing it manually, it can often allow you to get a better price than you would get otherwise.
IdeaHub
Have you ever opened up your trading software and just stared at the screen, wondering what to do?
Sometimes, trading ideas don't come so easily. That's where IdeaHub helps.
IdeaHub contains five categories: Big Movers, Earnings, Premium Harvesting, Covered Calls and Futures Options.
These categories are updated constantly based on an algorithm that scans what the market is doing in the immediate moment. As a result, you can always find a trade idea when you check Idea Hub.
Trading Patterns
The Trading Patterns feature analyzes the top stocks traded today by OptionsXpress customers.
It shows a diagram with icons whose size reflects the volume of trade for a particular asset. And these icons are colored red or green based on whether they are up or down on the day.
This is another idea-generating machine.
Xspreads
Xspreads allows you to see the “spread order book” of OptionsXpress itself.
In other words, it allows you to see the spread orders made by all of the other traders. This makes it easier for you to fill the orders of other traders and get a better price at the same time.
Strategy Scan
Another idea-generating tool, Strategy Scan gives you strategies to trade based on a symbol, time-horizon, direction, trading level, and investment risk.
For example, I asked Strategy Scan for ways to trade options on GDX.
In response, it gave me three strategies: a long straddle, long strangle, and collar. In each case, it told me exactly which call and put options to buy to implement the strategy.
This can be useful if you're trying to save time while trading.
Educational Materials
One of the best features of OptionsXpress is its robust library of educational materials. It has courses that teach how to trade each asset.
Each course is divided into “levels”, with articles that correspond to each level. By finishing all of the levels, a beginner can learn the basics of how to trade successfully.
There are also videos that teach how to trade each asset. This helps to reinforce the written lessons.
In addition to these on-demand resources, OptionsXpress also offers live webinars and workshops.
These not only reinforce the concepts taught in the videos and articles but also allows traders to get answers to questions they may have.
Customer Support
Having a lot of useful tools to trade is nice. But if it doesn't work when it's supposed to and you can't get a hold of the website, it isn't going to help much.
Luckily, OptionsXpress has a reputation for quality customer service.
They have phone support Monday-Friday 9 a.m. To 8 p.m. EST. And if you don't like talking on the phone, they have live chat and e-mail support as well.
Online reviews of their service has generally been positive.
OptionsXpress Review Final Verdict
Overall, OptionsXpress is a great choice for beginners or for traders who want a robust suite of tools to use in making their trading decisions.
It has a great educational section, easy-to-use software, and plenty of features to help traders generate ideas.
But for traders who are not interested in these features, they may want to check out other platforms such as Trade Monster, Trade Station or Options House.