Editorial Review

EOption Review 2019: Pros, Cons & How It Compares

A low fee of $0.10 per contract makes eOption ideal for high-volume, active options traders. The company also charges no commission for stock and ETF trades.

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Our Take

3.5

NerdWallet rating 

The Bottom Line: Broker eOption charges a $1.99 options-trading commission, but is ideal for active, cost-focused options traders due to a low options contract fee of $0.10.

eOption

eOption

Fees

$0

Account Minimum

$500

Promotion

None

no promotion available at this time

Pros & Cons

Pros
  • Low options contract fee.

  • Low margin rates.

  • International account options.

  • Automated trading.

Cons
  • Average trading platform.

  • High account fees.

  • Limited educational resources.

Compare to Similar Brokers

TD Ameritrade
TradeStation
Fees

$0

per trade

Fees

$0

per trade

Account Minimum

$0

Account Minimum

$500

Promotion

Up to $600

cash credit with qualifying deposit

Promotion

Up to $2,500

cash credit with a qualifying deposit

Full Review

EOption was once a leader in low-costs, but as it and other brokers have moved to $0 commissions, the company no longer stands out for stock trades. However, eOption specializes in options trading, and active traders may benefit from the broker's low pricing there — the company charges $1.99 per trade where other brokers charge $0, but the rock-bottom 10 cents per contract fee makes that total cost competitive for those trading four contracts or more.

New features this year include pre- and post-market trading, at the same rates as the regular market session, along with contingent order types for stocks and options traders.

eOption is best for:

  • Advanced traders.

  • International investors.

  • Low options contract fee.

  • Low margin rates.

  • Automated trading.

Where eOption shines

Low options contract fee: Many brokers now charge no base commission for options trades, so traders only pay the per-contract fee, which frequently costs around $0.65 per contract. At eOption, the cost to trade options is $1.99 plus a per-contract fee of 10 cents. What that means is investors who frequently trade four or more contracts in a single trade will come out on top at eOption.

Also of note are the broker-assisted trade costs, on stock, options and ETF trades: an additional $6 in most cases, which is cheap compared to other brokers' $20 to $25 surcharge.

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 $2 per trade for equities and $2 base plus 10 cents per contract for options.

Is this a good strategy? That’s debatable. When 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's 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.

Paper trading: For investors new to trading (and especially options trading), eOption has an attractive feature: a free paper trading tool, which is available even to nonclients. This gives investors $50,000 in virtual cash to use as they research and evaluate trading ideas, test strategies, actively monitor a simulated portfolio's performance and create a watch list — all without putting any real money on the line.

Margin rates: Margin traders, take note: eOption has some of the lowest margin rates available. As of late 2018, the base rate for account balances of $49,999 and under was 7.0%. That drops to as low as 4.5% for balances of $1 million and above.

International investors: The broker allows non-U.S. residents from some countries to open an international account. (Those countries are Australia, Austria, China, Germany, Ireland, Luxembourg, Mexico, the 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: For a broker that appeals to active traders, eOption's trading platform is a bit underwhelming. The web-based platform has fairly standard features, including news, analyst reports, the ability to place multi-leg options trades, charting features, a suite of technical analysis features and trading directly from options charts. Compared to other brokers' apps, eOption's has more functionality, with real-time quotes, charting and the ability to execute multiple order types. But the app gets dinged by users for glitches or crashing.

For investors with a minimum balance of $25,000, eOption offers direct-access trading via Sterling Trader Pro, DAS|Web and DAS|Pro platforms. These platforms carry additional fees, however.

Fees: Those platform and data fees can quickly eat into returns for customers who choose those tools — and on top of that, eOption 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.

Educational resources: The offerings are definitely geared toward a more knowledgeable trader. Advanced traders will appreciate the breadth of analyst reports, corporate filings, calendars of earnings reports and economic reports and a service that aggregates news related to companies, industries or people for trade research purposes. Aside from a lackluster blog and a bit of guidance on options trading, provided primarily via links to the Options Industry Council, beginners will be left wanting for more. Again, eOption is positioned for advanced investors who may not miss this information, but other brokers provide much more support.

Is eOption right for you?

Focused on providing a low-cost experience for active options traders, eOption fulfills its mandate. And that's great for investors who are making tons of options trades annually and where commissions and fees really drive overall costs. But for investors who are not glued to their trading screens, the base-level trading platform and lack of research and data could be deal-breakers.