Welcome to the second in a series of online brokerage reviews that I will be sharing on a monthly basis here at Frugal Rules. Last month I did a Scottrade review and today I bring you an OptionsHouse review which is one of the other main platforms I use alongside Scottrade. As I have said before, I love talking about investing in the stock market, especially to beginners. As I have worked in the market space for a number of years I have seen what many regular investors bring to the table and often times it boils down to education and needing assistance in terms of how to best determine what direction they should go. I am passionate about sharing my knowledge with others so they can make informed decisions about investing in stocks and more importantly, wisely investing for their future. That said, I opened a Rollover IRA with OptionsHouse about a year ago and thought I would share some of my insight on them.
As I’ve said in the past, there are dozens of platforms available and many will claim to be among the best online brokerages, though it’s not always the case. Ultimately you need to find what works best for you and will meet your needs as an investor. That said, OptionsHouse is a new player in the game, being around for the last six years. They’re actually run by and a part of Peak6 Investments which is based out of Chicago and has been rated by Barron’s as a 4-star brokerage each of the past four years. They specialize in options trading as well as trading for more active investors. While they’re not as well-known as some of the major players, let’s take a look under the hood at what OptionsHouse has to offer.
OptionsHouse Features
Streaming Quotes: Many brokerages offer streaming quotes, but are not always free. This is not the case with OptionsHouse. Once you open your account and fill out the requisite paperwork you have access to free real time quotes. If you’re someone that likes to keep a pulse on a specific stock, or the stock market in general this is a great tool to have.
The Trading Platform: The platform is not quite as intuitive as the Scottrade platform, but it is still fairly easy to use. If you’re looking to place stock trades it is a flat $3.95. Yes, you read that right…a flat $3.95. If you’re looking to trade options, which is their bread and butter then the commission is $5 for up to $5 contracts with $1 per contract thereafter or a flat $8.50 per contract with an additional $.15 per contract. Speaking from knowledge, these are VERY competitive rates.
Free Virtual Trading: I LOVE this feature and do not use it nearly enough. Do you have a stock strategy you want to try but aren’t quite ready to invest your own money? OptionsHouse gives you, with each account you open, a $5,000 virtual account, which you can use to test-run trading strategies.
Advantages of OptionsHouse
Fees Fees Fees: I am a firm believer that you should not choose an online brokerage based off of commission prices alone, but it’s hard to look at OptionsHouse and not like their fee structure. They have no hidden fees to speak of and the commissions are out of this world. In addition to the low fees, their margin rates are hard to beat.
Customer Service: Every time I have contacted their customer service center I get someone that actually knows what they’re talking about. Let me shine some light on call centers for some online brokerages – you will not always find people who know what they’re talking about. It’s sad, but true. They also offer a handy instant chat feature which I find invaluable.
Low Initial Minimums: If you’re looking to open an account, there is a relatively low barrier to entry as there is a $1,000 account opening minimum. If you’re looking to trade on margin, it’s a minimum of $2,000.
Efficient Trading Tools: While OptionsHouse can’t boast the trading tools that you’ll find at places like Scottrade, they’re still very efficient and can hold their own. Their tools are more along the active-trader/option-trader bent and can be very useful.
Disadvantages of OptionsHouse
Few Mutual Funds: If you’re looking to trade mutual funds with OptionsHouse, you’ll have few options available. While the $9.95 commission is VERY reasonable, the selection is limited. They offer roughly 1,000 no-load mutual funds. While it is good that they offer no-load funds, I would still like to see a more expansive offering from them.
Limited After Hours Trading: Most online brokerages allow you to trade in the after hours (the stock market is open for trading after the normal market is closed, but on a much more limited basis) until 8:00 P.M. EST. However, with OptionsHouse, they only allow trading until 5:00 P.M.
Flat Commission, with a catch: The commission for stocks is a flat $3.95, but that is only if the stock is over $2.00 in price. If the stock is below that $2.00 price point then you’ll need to add an additional $.005 per share on the trade. This is not an issue for me as I do not invest in penny stocks, but may affect penny stock traders.
What’s My Take on OptionsHouse?
If you’re looking to invest in the stock market, there are many options to choose from. Each of the players have things that set them apart and the case with OptionsHouse is that they offer great rates and a good platform for options traders. If lower rates are your thing and you’re looking to invest primarily in stocks, etfs or options then they are definitely worth a look. If you’re looking for something more long term in nature or for a brokerage that has access to a lot of mutual funds, then they may not be for you. I prefer to have several brokerage accounts as I can trade in one if the other platform is down. The other thing it allows me to do is trade a little more actively in one and do more options trading in one and do my more long term buy and hold type strategy in the other. If you’re looking for a more active platform with very low rates, OptionsHouse is a great choice and you can open your account online and be ready to go in as little as 15 minutes. OptionsHouse sweetens the deal by often running promotions for free trades or a cash bonus to clients who open new accounts.
Similar Posts:
- Online Brokerages I Use: Scottrade Review
- Reader Question: Should I Invest in Mutual Funds or ETFs?
- First Steps to Investing in the Stock Market
- 6 Frugal Ways to Remove the Pain From Investing
- 4 Simple Ways to Limit Losses in Stock Investing
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