eOption.com review (Oct 6, 2012)
is an online brokerage firm that specializes in low-priced option commissions but also offers stocks, bonds, and mutual funds (no forex though). It was founded in 2007 and is currently one of the smaller online brokers. eOption clears through Apex Clearing Corp. It has been rated among the best options brokers by Barron's, as you can see below:
- Barron's - "Lowest Overall Cost - 4.5 stars
- Barron's - "Lowest Cost for Occasional Traders - 4.5 stars
- Barron's - "Lowest Cost for Frequent Traders - 4.5 stars
Commissions & Features
eOption offers very low commissions for stocks and options.
- Options: $3.00 + $0.10 per option
- Stocks: $3.00 for market or limit orders (limit order only on pink sheets)
- Stocks (foreign): $39.00
- Stocks (extended-hours): $25.00 (plus $0.003 per share above 5,000 shares)
- Mutual Funds: $14.95
- Bonds: $5.00 per bond for the first 25, $3.00 each additional
- Broker-Assisted Orders: additional $6.00
- Additional fees may apply to orders greater than 2,000 shares directed to the NYSE.
eOption offers several account types, including: Individual, Joint, Corporate, Trust, Custodian, Investment Club, International, IRA (traditional, rollover, Roth, Coverdell, Simple, SEP).
eOption offers cash management accounts (although these tend to be less relevant these days with super-low rates). Their cash management offers automatic sweep, check writing, check card, and online bill payment.
As of October 6, 2012 their margin rates start at 5% for the lowest account balance and go down to 2.5% for the highest (over $1 million).
Minimum account balance to open an account is $2,000.
One of the weird things about eOption is that they have higher than normal account requirement for trading certain uncovered options strategies. I'm not sure why they would do this. See below:
- Naked Puts - $20,000
- Naked Calls - $100,000
- Naked Index - $500,000
The eOptions interface is extremely simple. You have: order entry, positions, real-time data, charts, news, Level II quotes, and screeners). Here is a screenshot of their complex order entry for options:
Tools & Benefits
Like all brokers, you can get most of their in-house tools (like screeners and options education) anywhere. One of eOptions biggest benefits is that they offer auto-trading where you can execute stock, option, or mutual fund trades automatically, based on your newsletter's trade alerts. You must first be a subscriber to the newsletter. An Auto Trade Order Handling Fee in the amount of $2.00 per execution applies to orders entered and filled by eOption's Auto Trade Desk and does not apply to orders entered on your own.
- 1 Option Profit
- 1st Virtual Hedge Fund
- 5 Day Options
- Active Investor Online
- Ambitus Capital Management
- Avant Options
- Benzinga's Cash Generator
- Benzinga's Options & Volatility Edge
- Best Stock Profits
- Booking Alpha†
- Boring Fridays
- Condor Options
- Cycle Spreads
- Davian Letter
- Earnings Traders
- ETF Credit Spreads
- ETF Trader Picks
- Investment Options 101
- Jay Biddy Trader
- Kirkland's Wealth Building Advisory†
- Monthly Cash Thru Options
- My Wealthy Options
- Options Made EZ
- Options Truth
- P3 System Advisory Group†
- Pay for Profits
- Peak Investing
- Prime Stock Tips
- Pro Stock System
- Pulse Options
- SK Options Trading†
- Spread the Trend
- Spread Trader
- Stock Advisor Group
- Stock Advisor Group ETF Swing Trading
- Taking Profits
- TradeGreeks - Options Magic/Options Speed
- The Option Genius
- The Options Prophet
- The Oxen Group†
- Trade Mavens
- Trade Weekly Options
- Trading Options for Income
- Underground Swing Trades†
- Wall Street Giant
- Weekly Options Trading
- Weekly Wealth Advisory
eOption also provides multiple direct access platforms for high frequency traders:
- Sterling Traderģ Pro is a trading platform that offers direct electronic access to all of the exchanges and ECNs, and is suitable for trading operations of all sizes.
- OmniPro is an advanced direct-access trading platform designed for professional traders to handle high-capacity demands, proprietary trading firms, and black-box trading systems. The OmniPro technology provides multiple-order entry configurations and monitoring controls. This platform can access every electronic U.S. and Canadian equity, options, and futures exchange. OmniPro also allows for Automated Trading Systems (ATS) management and the ability to build models and trade from Microsoft Excel or other third-party applications.
- eOption Direct is a streaming desktop platform enabling users the ability to trade equities and options. The platform provides up to two, level-2 boxes, two option montages, four streaming intraday chart boxes, and a streaming watch list. Users have the ability to trade from the option montage or level-2 box.
eOption is best known for offering the lowest option contract fee of any broker at $0.10 per option. By offering very low option commissions, eOption targets high-volume option traders. Here is their philosophy on their business model:
Our business model is not based on charging high commissions for tools and features clients do not use, or may already have. We appreciate that many of our clients have other accounts, just as most of us like to shop at a few favorite stores, not just one. Our value proposition is based on filling the deep discount niche, offering clients the ability to realize immediate significant savings with our no frills approach to trading....Quite simply, we donít have the overhead and ongoing expense to carry. We readily admit you will never see an eOption commercial during a football game. Nor will we bombard you with tools and functions which we know many clients donít use. We will however, give you a very good execution price and an easy-to-use system.
Although they offer the lowest option fees, they are still not a widely-known or popular broker. Even among the trading forums where full-time traders hang out, there is not much talk about them. Despite this, I think they are a fine firm to open an account with. They have a reputation for being a very basic broker with a very bare-bones interface and tools, so they are best used by traders who get their analytics and tools from a third-party.
If you are trading a high volume of options (a couple of thousand contracts per month), then you should definitely be with one of the two deep discount option brokers - eOption or OptionsHouse. If you are looking for a more reputable firm, I would open an account with OptionsHouse
given that they are only 5 cents higher than eOption. But if you don't care about being with a lesser-known firm (or the 5 cent lower commission makes a difference) then trying out eOption would be fine.