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OptionsHouse Review – The Discount Broker For Options Traders

By Mark Riddix

Today, we want to take a look at one of the newer players in the discount brokerage arena. You may be unfamiliar with the relatively new brokerage firm, OptionsHouse, but while the firm is one of the smaller brokers in the online stock trading business, it is one of the largest brokers in the options trading industry.

OptionsHouse was founded in 2005, and has its corporate headquarters in Chicago, Illinois. OptionsHouse is owned and operated by Peak6 Investments L.P. and specializes in options and options trading. The site was designed to make online trading faster and more efficient for traders. OptionsHouse has been voted by Barron’s as the best brokerage house for options traders in 2009 and 2010.

Key Features

  • OptionsHouse Indvidual / Joint Account. The OptionsHouse standard account is a cash account that can be opened as an individual account or a joint account. OptionsHouse users can buy stocks, options, mutual funds, corporate bonds, and U.S. Treasuries using a regular cash account. OptionHouse users pay just $3.95 for each stock trade and $1 per options contract. These are the lowest rates out there and it’s clear this is one of the obvious advantages to OptionsHouse among other advantages discussed below. They also offer a margin account for customers that want additional buying power.
  • Corporate, Partnership and Trust Accounts. Corporations, partnerships, sole proprietorships, investment clubs, limited liability corporations, and trusts can all open standard accounts as well.
  • Retirement Investment Accounts. OptionsHouse offer Traditional IRA’s, Roth IRA’s, SEP IRA’s, and Educational IRA’s for investors looking to open retirement accounts. Retirement accounts can contain stocks and options only.
  • OptionsHouse Options Contracts. OptionsHouse gives traders the ability to choose from 2 distinct fee structures for options trading. Traders can pay a flat fee of $1 per trade for each options contract or pay an $8.50 flat rate and 15 cents per contract.
  • OptionsHouse Mobile Trading Platform. The mobile trading platform is especially important for professional traders that want to make trades and view their portfolios from their Blackberry or iPhone. Traders get real time quotes and can check options activity from anywhere.

optionshouse

Advantages

  1. Low Minimum Opening Deposit. It only costs $1,000 to open a standard OptionsHouse account. This is relatively low compared to TD Ameritrade, Charles Schwab, and other brokers. Customers wishing to open a margin account will need $2,000 to fund their account.
  2. Low Trading Fees. Most discount brokers charge anywhere from $7 to $10 for stock trades. At just $3.95 per stock trade, OptionsHouse is the cheapest online broker going. You won’t find any other brokers that offer real time trading for such a low price. This price is even cheaper than Sharebuilder. Traders can trade options contracts for $1 a piece. Options prices get lower the more that you purchase. For example, 10 options trades will only cost you $10 and trading 100 options contracts is just $23.50. This is an incredibly low price for options trading.
  3. Trading Features. Most online brokers specialize in stock trading only. OptionsHouse is one of the brokers that offers extensive options trading help for traders. OptionsHouse offers a virtual trading platform that is customized to handle all kinds of options investing (spreads, collars, butterflies, butterflies).
  4. Trading Tools. The trading tools and options help is where OptionsHouse really shines. OptionsHouse offers professional investment coaching through webinars and options trading ideas through the Options News Network. The Options News Network (ONN) used to run on Jim Cramer’s website, TheStreet.com, under the title Mad About Options. The volatility charts and probability calculators are useful tools for options trading. Barron’s gave 4 stars to OptionsHouse for its research amenities, portfolio analysis tools, customer service, and trading experience.
  5. Free Cash Sweep. OptionsHouse offers a free cash sweep option. Available cash is deposited into the Scudder Money Market portfolio nightly so that traders can earn interest on available cash.

Disadvantages

  1. Lack of Research Reports. OptionsHouse lacks research reports for equities investors. Other brokers offer analyst ratings and research reports from investment firms whereas OptionsHouse does not. Investors will need to look elsewhere for this type of help with stock investing.
  2. Lack of Investment Products. OptionsHouse is not a one stop financial shop for all your investing needs. Scottrade, TD Ameritrade, and E*TRADE all offer a much wider selection of financial products. OptionsHouse is primarily designed for stock and options trading only. The company does offer a small amount of mutual funds but nowhere near the offerings of other brokers.

Final Word

While I have not personally traded my own money at OptionsHouse yet, I have traded a virtual account. I would recommend OptionsHouse for experienced traders and options investors. Novice traders may be a bit overwhelmed at first using the site, but OptionsHouse does offer a low cost platform for those looking to dip their toes into the trading waters. And as mentioned, novices can always start by trading with $5,000 in virtual dollars to get comfortable with the sytem. The trading platform is very well designed for heavy traders that are looking for fast trade execution with no frills.

I think that the low fees are a major selling point for OptionsHouse. They have the lowest fee structure in the industry and a low cost per contract for options trading. If you want to know if OptionsHouse is right for you, try out the virtual free account to test out the software. OptionsHouse will stock your account with $5,000 free virtual dollars so that you can get a feel for the trading platform and execution time.

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

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Comments

  • Tina

    Love OptionsHouse! Their customer service keeps outperforming my expectations. They are careful with personal information (trade confirmations to your email address do not list details – you have to sign into your account to view transactions). For a first-time trading non-professional (me), their website is chock full of research and trading tools. VERY satisfied with every aspect of this company. Just wish I had found them before I signed up with Sharebuilder and “wasted” money on higher commission fees.

  • Daniel

    I agree. I just opened my OptionsHouse account. It isn’t funded yet because my portfolio money is still in Sharebuilder, but I must say the OH platform looks great. Sharebuilder used to be a good deal but now it’s more expensive in every way and the platform is severely lacking. Sharebuilder doesn’t even give you complete research or live streaming quotes, and the fees are much higher. No-brainer!

  • DK

    Optionshouse has the worst custumer service.

  • Dennis

    Options House are crooks… They sold my shares without my knowledge. They sent a message to my message box about the transfer house not carrying foreign currency stocks anymore. They did not even bother to send out regular mail or email. Take your money and go somewhere else! I was in a buy and hold situation on these stocks. These guy are outright crooks! Go somewhere else! Or better yet buy silver and gold.

  • Krazzi1

    I’ve been using Options House for 6months now, and have had no problems at all. Customer service has been great whenever I’ve called. I would recommend Options House to anyone that wants to learn about Options or even just trade stocks. Check out their free webinars.

  • johnSmith

    You get what you pay for. I was lured by all the low fees and traded with them for a couple of years, but each and every transaction had hiccups. Their statements are useless, cost basis calculations were flawed for tax purpose, you name it. The biggest issue is when you want to transfer money. It takes 3+ days (yes, its on their website in fine print) for ACH transfers to clear. Compare that to 24 hrs with Fidelity. How do you think they recouple the low fees. Worse is their trade execution, someone needs to investigate this company and how they deal with customers. I am cutting them loose. Just stay away!!! If you see good reviews for these guys and want to open an account, do it with $100 and just see how long it takes to get started on trading, and then try to get that money out. You will form your own opinion by then.

  • Bill T

    DO NOT PUT YOUR MONEY HERE! I don’t know where to start with this online broker. The customer service here is awful. I have been a customer here for a couple of years and it has only gotten worse. I consider myself an active trader and make 20 trades per week. The brokers here are not properly trained or educated with margin trading, trading rules, order execution and options in general. They have EXCESSIVE hold times when you try to call in and talk to someone. I have tried a few times in the past week and was on hold for at least 30 minutes +. This is unacceptable and the manager who is in charge obviously does not care. I have tried to get a hold of this company and asked to speak to a supervisor and they always say that no one is available. They are in clear violation of rules. They also get payment for their order flow from the market makers and exchanges that they route their orders too. That is why many have previously said that their order execution is awful. I also have an account at ETrade and their orders route a lot quicker. OptionsHouse has a horrendous trading platform and is very outdated. Their charting is also horrible. I learned the hard way being here. Don’t waste your time with this company.

  • keyi

    Awful company to work with. They hold your money for too long. When you need your money urgently, you will learn. I am a nice person and care about people’s reputation. This is the first time I have given negative reviews. You can imagine how angry I am about these crooks. I am going to close my account.

  • jeff

    Options House sucks big time! Their platform is terrrible!!!!! It super easy to make a mistake when using their system and they dont make changes.

  • Shawn

    After trading options for 4 days starting Oct 21, 2013, I moved my account. The platform would take 3-6 attempts to place an order and the charts are the worst. How does a brokerage firm who makes their money on people trading build a platform that doesn’t let me trade? That should tell you all you need to know about OH.

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