I have recently started taking a look at the options market on Buy Like Buffett. Options investing is a great way to control a position in a stock without having to invest all of the dollars that a common stock may cost. It is also useful for helping to protect yourself from downward movement in the market.
OptionsHouse is one of the more established options brokers on the Internet. The brokerage firm started out dealing with options trades only and eventually expanded its operations into letting customers buy stocks. OptionsHouse is known for its low pricing which makes it one of the lowest cost brokers in the industry.
Barron’s voted OptionsHouse the #1 options broker in the industry for 2011.
Let’s take a look at the pros and cons of OptionsHouse to see how it stacks up against other brokers.
Lowest Trading Fees
OptionsHouse has the lowest fees of any broker that I have reviewed. The fees are lower than those of Scottrade, E*Trade, TD Ameritrade, and TradeKing. OptionsHouse offers stock trading for just $3.95. Investors will have a hard time finding any broker that can beat those prices.
Options trading cost $5 for 5 option trades. Anything more than that amount costs $8.50 and 15 cents per contract. That is remarkably low pricing for those that trade a large amount of options contracts.
OptionsHouse has one of the best trading platforms that I have found. I am very picky about the platforms at online brokers because too many have vanilla trading platforms that can be difficult to use. OptionHouse trading platform is incredibly easy to use and has a ton of features that make trading quick and simple.
Interactive Investment Coaching
OptionsHouse features live interactive investment coaching at its online campus. Customers can take advantage of this live coaching to learn the best strategies for buying and selling options. One on one coaching is available for a fee for those that need personalized attention. I found that the webinars are full of information that can benefit both rookie and veteran traders.
The virtual trading platform is a plus because you can demo an account before deciding whether or not to open an account. Many brokers do not offer demo accounts and force you to open an account before trying out the platform. OptionsHouse lets you play around with $5,000 virtual dollars that you can use to place stock and option trades with.
OptionsHouse has a number of ways that make it easy to get in contact with a customer service representative. You can use the phone, email, or fill out a form on the company’s website. A response typically only takes a few hours via email. That is impressive considering the fact that some brokers take days to reply.
Minimum Balance Requirement
While many discount brokers have reduced their minimum balance requirements or eliminated them all together, OptionsHouse has not. You need $1,000 to open a trading account. That is not a lot of money but it is more money than many competitors require. Scottrade will let you open an account for $500 and TradeKing has no minimum account opening requiremenr.
While OptionsHouse excels at placing options and stock trading, the company lags behind when it comes to fund offerings. Like most options brokers they have a limited selection of mutual funds and exchange traded funds compared to larger retail brokerages.
OptionsHouse’s Grade: B
While I do not have an account at OptionsHouse I would recommend the broker to anyone that is looking to get involved in options investing. OptionsHouse pricing makes it an even cheaper alternative to the low cost broker TradeKing. I do think that TradeKing has a few more features in terms of free investor education and tools that justify the $4.95 pricing compared to OptionsHouse. That is why I have given TradeKing a slightly higher grade. Anyone that is in the market for the lowest cost broker and wants to do some serious options buying should take a closer look at OptionsHouse.