Evaluating optionsXpress as a Stock and Options Broker

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Before we get started, I feel I should disclose that I have used optionsXpress as one of my brokers for a few years now. I say “one” of my brokers because I have my portfolio diversified across a few different brokers, but my evaluation of optionsXpress is based on first-hand knowledge and experience.

optionsXpress, a publicly traded company (ticker symbol OXPS), is one of the more mature online brokerages.

optionsXpress consitently ranks highly in broker comparisons conducted by Barron’s and others. However, we are not too concerned with other outside ratings. We are more concerned with how optionsXpress may or may not fit with your trading objectives and style.

Let’s take a look at who may benefit the most from opening an optionsXpress account and who may find better luck elsewhere.

Target Audience for optionsXpress

The target audience for optionsXpress seems to be active investors who are looking to diversify their portfolio across a broad range of investing products. For instance, if you are a trader who places a few options and futures trades per month while holding some longer-term investments in stocks, exchange-traded funds (ETFs) and mutual funds would be an ideal candidate to open and optionsXpress account because you can manage everything within one account.

Of course, optionsXpress or any other broker will say that they would love to work with any investor, regardless of their holdings, but the product offering and commission and fee structure seem to benefit active to semi-active traders who want to invest in a broad range of products.

Products Available at optionsXpress

The product lineup at optionsXpress is one of the broker’s strong points. You can trade the following products within the same account at optionsXpress:

– Stocks
– Options
– Futures
– Bonds
– Exchange-traded funds (ETFs)
– Mutual funds

If you are looking for product flexibility without the hassel of switching back and forth between accounts, opening an account at optionsXpress is a good option.

Commissions and Fees at optionsXpress

optionsXpress doesn’t have exorbitantly high commissions and fees nor does it have extremely low commissions and fees. If you were to put the commission and fee schedule for optionsXpress on a price scale, it would be somewhere in the middle.

If you are strictly looking for the lowest fees possible and are willing to give up some of the service and tools that a slightly higher priced broker usually provides, optionsXpress may not be for you. However, if you are willing to pay slightly more for a full range of investment products and a suite of investment tools, take a look at optionsXpress—which has both.

Ease of Use with optionsXpress

One area where optionsXpress really shines is in its ease of use. Checking your account status, entering new stock and option orders and monitoring your portfolio is easy with optionsXpress’ simple, streamlined interface.

optionsXpress also offers a full suite of analytical tools and educational information. You can run stock searches, monitor today’s market action and analyze option Greeks without ever having to leave the optionsXpress platform.

Plus, you can access your optionsXpress account from any computer with an internet connection because it is a web-based platform—not a client-based (software that lives on your computer) platform. Of course, client-based platforms are typically a little faster on their fills and such so you might experience some sluggishness in your order-entry process using the web-based platform, but that shouldn’t be much of a concern unless you are an extremely active day trader who controls huge positions.

Pros and Cons of optionsXpress

To summarize what we’ve discussed above, the following are the pros of working with optionsXpress:

– Access to a broad selection of investing products within a single account
– Access to an extensive suite of analytical tools and investment education material
– Easy-to-navigate trading platform
– Access to your account from any computer with an internet connection

The following are the cons of working with optionsXpress:

– Relatively high commissions when compared to the bargain-basement brokers
– Order entry can become tedious if you are an extremely active day trader who is placing multiple trades per day