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.
- 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.
- 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.
- 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.
- 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).
- 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.
- 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.
- 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.
- 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.
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.