eOption is a discount brokerage firm, founded in 2007, which aims to reduce costs for online traders and increase efficiency during trade executions. As the name suggests, the company's primary focus in on options trades, which is why it can brag about offering one of the lowest commission rates for options trades. If this weren't enough, the brokerage firm also boasts one of the lowest commission rates for trading securities and ETFs in the industry. The online brokerage firm tailors its services to the needs of its clients. For investors looking to simply place trades online, the firm provides a platform from which to do so. But for more advanced traders who want sophisticated offerings, the firm provides multiple direct access platforms.
- Flat rates
- International trading
- Trading platform options
eOption is a brokerage firm that offers some of the lowest commissions in the industry. The firm doesn't charge a minimum deposit fee to start an account, which means users can freely do so without any monetary obligations. eOption's primary product is its options, which are charged $3 per ticket plus $0.15 per contract. This fee makes the brokerage firm one of the best choices for options traders. It's no wonder the company was rated third in overall costs by Barron's magazine in 2015. Benefits include:
Active traders who frequently place trades could benefit from the brokerage fee's flat rate fee rates. For investors with an account balance greater than $2,000, the brokerage firm allows its users to select margin accounts, where users can purchase a part of some securities and borrow the rest of the purchase from the firm.
International traders could also find the firm advantageous since eOption offers international trading. This means that international investors can create accounts with the company and begin investing, namely investors in Austria, China, Germany, Australia, Ireland, Luxembourg, Mexico, to name a few countries.
Trading Platform Options
eOption also offers its users a choice between three trading platforms: Sterling Trader Pro; Das|Web; and Das|Pro. These options permit users to choose a platform that can cater to their specific trading preferences and strategies. Some of the features on these platforms include streaming quotes and charts, creating portfolio watch lists and accessing independent investment research, among other features. Sterling Trader Pro, the desktop trading platform, is well designed and suited for both retail and professional traders. The platform offers users unique charting, tracking, and risk testing capabilities, and other basic tracking features that further facilitate the investment process.
eOption's mobile app also comes with its perks. It accommodates traders on the go, which adds to the brokerage firm's competitive edge. The mobile app allows users to access their accounts, view their positions and balances, and view their buying power. The app provides investors access to real-time quotes, news, options, and charts. This comprehensive app makes eOption rise above the company's competition, especially since clients in the industry covet such new and fast approaches to investing.
- Extra costs
- Educational resources
- Client support
eOption is known for its competitive prices, however, investors should keep in mind that there are additional and hidden fees associated with the firm. For instance, the firm charges expensive extended hours trades fees, starting at $25, which is a very steep price to charge. Our research uncovered several customer complaints about these after hour fees. Additionally, while options commissions are significantly reduced with eOption, the brokerage firm actually charges a $9.00 exercise and assignment fee, making options trades not that affordable anymore. Investors with eOption also need to remain active with the brokerage firm. Inactivity can incur fees, $50 per year to be exact. Inactivity is classified as less than 2 trades in the past 12 months or less than $10,000 in credit or debit balances. Other limitations include:
While eOption provides helpful tools and resources to facilitate investments, these tools can come at a price. For example, the firm's live streaming quotes are only free for users who make 100 or more trades per month. Users who don't place these many trades will incur charges. If they make 0 to 50 trades, they'll be charged $35 per month for the live streaming quotes. If they place 51-99 trades per month, then they'll be charged $15 for the live streaming quotes. Either way, these additional fees could turn off some investors.
While eOption's web-based trading is free, the brokerage firm's other trading platforms come at additional fees and require a high amount of network bandwidth to maintain, which is another detail users need to consider. Unfortunately for the firm, users of these trading platforms fail to justify the additional fees. The trading platforms don't support more advanced options functionality.
The brokerage firm also doesn't provide educational and research tools to facilitate the investment process. The few guides that are available are geared solely towards options traders, ostracizing the firm's other investors.
eOption's customer service garners mixed reviews among users. The lengthy application process to open up an account disappoints several new users. In addition to this, some users are prompted to submit some of their materials via mail rather than submitting documents online. This presents another element of inconvenience.
The Bottom Line
eOption's low commission rates, platforms, and tools are ideal for options traders. Most of the brokerage firm's services, in fact, are geared toward attracting and keeping options traders, which tends to ostracize other investors. Additionally, eOption isn't a great choice for inexperienced investors, since the brokerage firm doesn't provide educational resources and tools to help guild investment choices.
The functionality of eOption's platforms and tools are pretty rudimentary and require major updates to create positive impressions on its users. Experienced investors may also find the firm's services frustrating and lacking in certain areas that can be fulfilled with other brokerage firms.
eOption was given the third lowest ranking in Barron's magazine's annual broker surveys in both 2013 and 2014. The only category it did great in was Costs. Thus, the brokerage firm's options prices rise above the industry's average, especially for high volume traders whose trading activity could mitigate the additional costs and hidden fees incurred from using eOptions. Hence, the platform is ideal for independent, self-reliant, and experienced options traders.