Rock-bottom stock and options trading commissions and low margin rates are standout features for eOption’s target clientele: active traders who prioritize low costs over fancy tools, trading platforms and research. Those pluses are also what landed the deep discount broker a spot on our list of best online brokers for day trading.
The biggest minuses: eOption’s spare trading platform and thin lineup of research tools. These drawbacks may not matter to investors who already have the analytical tools and data they need and just want a cheap way to execute trades. But those looking for a more robust trading environment may find eOption lacking.
February 22, 2016
eOption is best for:
- Advanced traders
- International investors
- Low commissions
- Low margin rates
- Automated trading
eOption at a glance
|Stock trading costs||$3|
|Options trades||$3 + 15 cents per contract|
|Account fees (annual, transfer, closing, inactivity)||
|Trading platform||Basic capabilities|
|Mobile app||Mimics platform functionality|
|Mutual funds||No transaction-fee-free mutual funds; $15 per trade|
|Commission-free ETFs||No commission-free ETFs|
|Research and data||Limited|
Where eOption shines
Commissions: It’s tough to beat $3 stock trading commissions, especially if you’re not an active trader who can benefit from volume discounts that other brokers offer. EOption’s costs for options trading are equally attractive, with just a 15 cent contract fee in addition to the $3 base. Also of note here are the broker-assisted trade costs: an additional $6 in most cases, which is reasonable compared with the typical fee, which runs upward of $20. However, fund investors should note that the company doesn’t offer any no-transaction-fee mutual funds or commission-free exchange-traded funds.
Automated trading: Part of eOption’s target audience are investors who use automatic trading based on newsletter suggestions. How this works: Account holders subscribe to one of the roughly 80 participating newsletters, then authorize eOption to automatically execute recommended trades from that newsletter. Customers can choose the maximum amount per trade — based on dollar amount, number of contracts or percentage of account value — and change their auto-trading subscription at any time. The cost is $5 per trade for equities and $5 base plus 15 cents per contract for options.
Is this a good strategy? That’s debatable. Because trades are triggered automatically by a newsletter trading alert, investors have no time to review the order before it’s executed. Also note that customers are required to set their account investment objective as “speculation” to enroll in eOption Auto Trade services. But if you frequently follow the directives of investing newsletters that participate in eOption’s service, putting things on autopilot might be appealing.
Margin rates: Margin traders, take note: EOption has some of the lowest margin rates available. As of February 2017, the base rate for account balances of $49,999 and under was 5.50%. That drops to as low as 3% for balances of $1 million and above.
Open to international accounts: EOption allows non-U.S. residents from some countries to open an international account. (Those countries are: Australia, Austria, China, Germany, Ireland, Luxembourg, Mexico, Netherlands, New Zealand, Singapore, South Africa, Switzerland and the United Kingdom.) Cash accounts require a minimum opening deposit of $5,000, and an additional $5,000 security deposit is required for a margin and spread trading account.
Where eOption falls short
Trading platform: There’s nothing notable about eOption’s trading platform, which is web-based and offers standard features, including the ability to place multileg options trades, perform technical analysis and trade directly from options charts. The company’s mobile app is a bit better — though still not a standout — with real-time quotes, charting, news and the ability to execute multiple order types. One nice touch is OptionsPlay, eOption’s free paper trading tool that lets investors research and evaluate trading ideas and test strategies without putting any real money on the line.
EOption also offers investors with a minimum balance of $25,000 direct-access trading via Sterling Trader Pro, DAS|Web and DAS|Pro platforms. These platforms carry additional fees, however. Sterling Trader Pro is $230 per month; DAS is $30 per month for the ActiveWeb Trader version, $40 per month for the mobile app and $130 per month for the platform. Data fees also apply and range from $1 to $30 per month.
Fees: Aside from those platform and data fees, which can quickly eat into returns for customers who choose those tools, eOption also charges investors a series of other fees that aren’t common among its competitors. Individual retirement accounts are charged a $15 annual fee, and the broker charges a $50 inactivity fee on accounts that go 12 months without at least two executed trades or have less than $10,000 in credit or debit balances.
Research: The offerings are thin here, as are educational resources, aside from a lackluster blog and a bit of guidance on options trading, provided primarily via links to the Options Industry Council. Again, eOption is positioned for advanced investors who may not miss this information, but other brokers provide much more support.
For the active trader
EOption’s mission is to provide an efficient, low-cost way for active investors to execute trades. What’s not on the menu is a head-turning lineup of research and data or a trading platform anywhere near the advanced offerings elsewhere. Doing away with any frills is how the deep discount broker keeps trading costs and margin rates competitively low. Elsewhere, paying a bit more in commissions means an upgrade to platforms with more robust lineups of analytical tools and guidance. But for active traders who just need a place to place trades, the cost savings at eOption can be worth the sacrifice.
Updated March 3, 2017.