OptionsXpress is a leader among online brokerage firms and is known for its intuitive, innovative, and easy-to-use tools. It has been consistently ranked as one of the best online brokers in the US by the likes of Barron's magazine and Kiplinger magazine. Founded in 2001, the brokerage firm is currently a subsidiary of The Charles Schwab corporation and it caters to a variety of traders from casual options traders to futures traders. While some of its fees are higher compared with other discount brokerage firms, it offers discounts in other areas to make up for these costs. However, users don't mind the fees since they usually agree that the quality of the platform and the company is worth the additional costs.
- Tailored resources
- Client support
The optionsXpress platform offers a variety of investment choices such as stocks, options, mutual funds, ETFs, and bonds. The brokerage firm accommodates international stock trading and forex trading, which gives the company a competitive edge in the sea of brokerage firms. While the firm charges higher commission rates, it doesn't require a minimum account balance to open an account and the firm offers broker assisted trades at no additional cost. Other benefits of the service include:
The company is also constantly innovating new ways to make the investing process as seamless as possible and their website is a prime example of this fact. It's user-friendly and boasts a clean design. The tools featured on the website are organized by experience level and type, making the brokerage firm the only broker to streamline their services to accommodate varying experience levels. Additionally, the brokerage firm is also known for its all-in-one trade ticket, which means investors can trade stocks, ETFs, options, futures, and future options from a single page.
Another coveted tool is their Walk Limit, which automatically updates options orders to garner the most favorable prices. This means that investors don't have to manually modify their options orders based on changes in the market. Instead, they can rely on the Walk Limit feature to gain the most favorable price within the National Best Bid or Offer (NBBO). If these features weren't enough to brag about, in 2014, the company launched IRIS, which is a notifications assistant icon that sits in the upper right corner of the investor's desktop. It notifies users of important alerts, trades, and tools updates.
The online platform is customizable so investors can tailor their dashboards to see specific windows and views. The platform also offers educational resources and tools for beginner investors who might need extra help in the investing process. One such tool is the Idea Hub. Our research uncovered that it's a scanning tool that considers trade ideas based on market activity and risks. For instance, the tool takes trade ideas and automatically compares them to profit and loss charts and probability factors.
In addition to these highlights, we found that the brokerage firm's customer service is very efficient. Whether communicating via live chat, email, or telephone, optionsXpress representatives are quite knowledgeable and friendly, well above the industry average for customer service quality. Furthermore, for investors on the go, the brokerage firm provides a trading app so traders can trade stocks and options, access real-time quotes, and manage watch lists all from their favorite smartphones or devices. This adds yet another competitive edge to the brokerage firm's arsenal.
- Premier platform limitations
- Owned by another firm
While optionsXpress provides an unparalleled platform, its pricing structure can prove costly for some of the most casual investors. When investors trade stocks and ETFs, optionsXpress charges a flat fee of $8.95 per trade, which is a lot more than other discount brokerage firms. So, investors who prefer to trade stocks over options might want to consider cheaper alternatives like Scottrade. Other drawbacks include the following items:
When it comes to options trades, the brokerage firm charges a flat rate fee of $14.95 for up to 10 contracts and then $1.50 per contract for any number above 10. These fees apply to traders who make less than 35 options trades per quarter. If investors make more than 35 options trades per quarter, their status changes to active traders and they face a minimum charge of $12.95 for up to 10 contracts, and then $1.25 per additional contract. This means that if investors trade only one single option, the commission on that option would be at least $12.95, which is pretty costly compared to other discount brokerage firms like ETRADE's $10.74, Scottrade's $8.25, and OptionsHouse's $5.45.
Premier Platform Limitations
Another drawback to the brokerage firm is its premier platform, Xtend. The platform is offered in two forms as a tool on the website and as a desktop feature. The desktop version, while visually stunning, is slow and difficult to use. The layout has preset variables, which means users can't customize their windows as they would like to. The charting feature is also considerably weaker compared to charting tools that can be found elsewhere.
Owned By Another Firm
Another slight drawback is the fact that optionsXpress is owned and operated by Charles Schwab. If an investor is a Charles Schwab client, then he/she can freely log in and use the optionsXpress site. However, an optionsXpress investor will need a Charles Schwab account to access the Schwab benefits. These benefits include financial advisors, additional brokerage services, and banking services, advantages that optionsXpress doesn't provide on its own. Thus, investors with optionsXpress should realize that in the next several years, the brokerage firm will be shut down and fully integrated into its parent company, Charles Schwab. So, it would be in their best interests to migrate to Charles Schwab in order to continue enjoying the benefits of optionsXpress.
The Bottom Line
optionsXpress' can be a costly alternative compared to other brokerage firms, but many users believe its functionality more than justifies the additional cost. Its award-winning platform features competitive tools that allow investors to achieve many feats like building strategies and placing trades on a single screen, and identifying risks using a probability calculator. The brokerage firm has received rave reviews and ratings for these features by investors and the media alike. Barron's magazine, for instance, gave the brokerage firm 4 stars for 12 years in a row and rated it among the Best for Options Traders for the past 5 years. Kiplinger's magazine rated it 5 stars for costs and a Mecca for Options Buffs.
Thus, at the end of the day, the website and online tools are unparalleled in nature and are what people are paying for. So, depending on the needs of investors, optionsXpress can either exceed or fail to meet those needs. If those needs are trading options, functionality, and innovative investing features, than optionsXpress would be a prime brokerage firm to meet those requirements. However, if those needs are casually trading stocks, a cheaper discount brokerage firm would be a better alternative to fulfill those needs.