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EOption Review 2018

January 25, 2018
Brokers, Investing

eOptionIf you’re an active trader focused on low costs above all, eOption could be just the broker for you. EOption offers incredibly cheap stock and options trading commissions, while its low margin rates put it among the very best in that category. Those standout features earned the broker a place in NerdWallet’s list of best online brokers for day trading.

While eOption is laser-focused on costs, it doesn’t provide some of the other features that beginning investors might want. The company’s base trading platform is, well, basic, while research tools are limited. Those minuses may not be huge drawbacks, however, to investors who already have their research and data from other sources, those who have more experience in the markets and already know what they need, and those who care about trading costs more than anything else.


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quick facts

  • Commissions: $3 per trade
  • Account minimum: $500
Get started at eOption
Get started at eOption

eOption is best for:

  • Advanced traders
  • International investors
  • Low commissions
  • Low margin rates
  • Automated trading

eOption at a glance

Overall

Account minimum$500
Stock trading costs$3
Options trades$3 + 15 cents per contract
Account fees (annual, transfer, closing, inactivity)
  • $15 annual fee for IRAs
  • $60 full transfer out fee
  • $50 inactivity fee on accounts that haven’t traded at least twice in the past 12 months or have less than $10,000 in credit or debit balances
Commission-free ETFsNo commission-free ETFs
No-fee mutual fundsNo transaction-fee-free mutual funds; $15 per trade
Tradable securities
  • Stocks
  • Bonds
  • Mutual funds
  • ETFs
  • Options
Trading platformBasic capabilities and charting; advanced platform for direct access traders
Mobile appMimics platform functionality -- streaming quotes, charting, market news and account management
Research and dataLimited
Customer support options
  • Phone support Monday-Friday 8 a.m.-8 p.m. Eastern
  • Email support
PromotionNone

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 is investors who use automatic trading based on newsletter suggestions. How this works: Account holders subscribe to one of the roughly 60 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 January 2018, the base rate for account balances of $49,999 and under was 6.0%. That drops to as low as 3.5% 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.) Accounts can be opened with a minimum of $25,000 in any combination of cash and securities.

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 multi-leg options trades, perform technical analysis and trade directly from options charts. The company’s mobile app is better, with real-time quotes, charting, news and the ability to execute multiple order types. EOption also offers a free paper trading tool that lets investors research and evaluate trading ideas and test strategies without putting any real money on the line.

But your options for a trading platform extend beyond this base platform. EOption 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

Focused on providing a low-cost experience for active traders, eOption fulfills its mandate. And that’s great for investors who are making tons of trades annually and where commissions really drive overall costs. But for investors who are not glued to their trading screens, the underwhelming base-level trading platform and the lack of research and data might be deal-breakers. That’s the price of deep discounts, though. Those willing to pay more in commissions at other brokers can find more robust platforms and more investment guidance. But for active and cost-conscious traders, eOption is one of your best options.