Options Broker

Choosing Your Options Broker

Finding the best options broker for you isn't as simple as finding the cheapest price. Decide what's important to you in an options broker - customer service, value, order execution, powerful tools, security, etc. - before choosing a new options broker.

You're confronted with options broker advertisements every time you turn around so you might be a little overwhelmed. Every online brokerage seems to be interested in you if you're investing in options. Don't settle merely with what's familiar in a brokerage firm when looking for an options broker.

Expect Outstanding Service from your Options Broker

Outstanding service from your options broker is more than just executing your buy and sell orders. Though some are better than others, any firm can do that. Look for the options broker that takes the extra step to give you the information you need to make informed trading decisions, and the facilities to make your trading a little easier. Look for an options broker firm that offers various levels of access to its experienced, option-trading employees - via email, live online access, as well as telephone. FINRA licenses certain brokers as "Registered Options Principals" based on certification. Don't settle for less. Here are some guidelines to follow when selecting an options broker.

Does your Options Broker Offer?:

Ease of Use

Look for conveniences from your options broker like quick and easy access between stock and option quotes, trading account information, analysis tools, and order entry screens in just a couple of mouse clicks. A well designed options broker site is intuitive, and anticipates your next thought. You shouldn't have to fight an interface while you think. Do you need more than simply a computer connected to the Internet? Some options broker firms require additional software, hardware or bandwidth to even their sites.

Order Entry & Execution

Quick order execution is critical in the options marketplace, but trades can't be executed until they're entered. Look for an easy walk through of the mechanics of more complex transactions. Subscribe to an advisory service? Look for the ability to automatically execute strategy recommendations. Frequently have certain market criteria you want met before some of your orders are executed? Look for the ability to specify a variety of order contingencies. Does your options broker guarantee the NBBO (National Best Bid or Offer) for options? This guarantee may save you a lot over the course of your investing.

optionsXpress guarantees the NBBO on option trades, and deliver price improvement on 25% of all orders through XpressRouter^®.

Tools, Quotes, & Information

Search for an option broker that delivers more for your money. In addition to real-time and streaming option quotes, expect to find a variety of educational materials that can help teach you what you need to know about options. Look for technical charting capabilities and data if you're into this, as well as tools for option strategy evaluation and execution. Information is powerful. A consistently successful investor is an informed one. Whether you're new to options or just want to brush up, look for an options broker that offers in-depth, options-oriented research and analysis from a variety of sources.

Account Choices

Look for a firm that offers the array of account types that you might need either today or in the future:

• Individual
• Joint Tenants
• Trusts (Regular, Keogh, PSP, MPP)
• Corporate & LLC's
• Partnerships (Regular, Investment Clubs)
• Custodial (Regular, Education IRA, IRA/ROTH)
• IRA (Traditional, Roth, SEP)

How easy and how long does it take to open and fund any of these accounts? What facilities for transferring cash into and out of an existing account does your firm offer?

optionsXpress offers all these account types, and the ability to easily set up additional accounts for all your investing needs.

Cost

Perhaps a leveling factor in making your choice of option brokers is its commission rates. Ask yourself, what do you pay for what you get? In short, look for more bang for the buck. In addition to the rates being affordable, are they straightforward and easy to understand? Investigate this thoroughly and look for hidden costs. Trade a lot? Ask about rates for more active traders. Be careful of hidden fees - does the option broker charge for helping you through a trade on the phone? Many do. How about inactivity fees? Commissions don't always tell the whole story.

optionsXpress is one of the few option brokers to offer a simple fee structure for options trade: as low as $12.95 per trade or $1.25 per contract (not $12.95 PLUS $1.25 per contract.)

Financial Stability of the Options Broker

Know with which regulatory bodies your options broker firm is registered - e.g., FINRA, CBOE? How well is your firm capitalized? By whom is your online firm insured? What financial protection do you have for your trading account(s) if your firm were to fail? Is your account insured by SIPC? Be comfortable with the answers you get.

System Reliability & Security

Ask about the reliability of your option brokers hardware and software. Are its trading systems tested and connections to the Internet adequately redundant in case of intermittent failures? However good the answers you get, remember that online trading has inherent risks due to system response and access times that vary due to market conditions, system performance and other factors such as your Internet service provider. Is data passed between you and your firm encrypted for added protection? Does your option broker monitor and test its security capabilities?

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