OptionsHouse is a game changer within the discount brokerage scene. In fact, OptionsHouse epitomizes discount brokerages in the simple fact that they’re one of the cheapest brokers in the industry. If you’re looking for a new discount broker hopefully this OptionsHouse review will help you determine if they’re the right place for you.
As was referenced in the Motif Investing review, there are many online brokerages to choose from. A simple Internet search would bring back hundreds to choose from. This can make it difficult to know which are the best ones to select.
The approach OptionsHouse takes is the belief that you should not pay too much for your investing. In fact, OptionsHouse takes the lead, along with TradeKing, in the discount brokerage space of having the lowest stock trading commission available – a flat $4.95 per trade! When many other brokers out there start out at $7 or more per trade this is an instant savings for you as a retail investor.
OptionsHouse has been in business for roughly ten years. OptionsHouse first started as a brokerage that specialized in options trading and those who would consider themselves active traders – thus the dirt cheap price of $4.95. In fact, when OptionsHouse first opened for business they were charging $3.95 per trade which helped put pressure on other players within the industry. As many retail investors were used to paying at least $10 per trade OptionsHouse and others like them provide an obvious edge in the brokerage space.
OptionsHouse made news in late 2014 with their merger with TradeMONSTER. Both OptionsHouse and TradeMONSTER had similar backgrounds and offerings that made a relationship between the two beneficial. That aside, OptionsHouse has regularly been recognized as one of the best options for online brokerages for six years in a row by Barron’s coming up with a 4.5 stars out of a possible 5.
OptionsHouse offers a number of different account types from the standard brokerage account to Traditional, Roth, Rollover 401(k)s and SEP IRAs along with Investment Clubs and Trusts. With that background of out the way, it’s time to move on to a more in-depth OptionsHouse review.
Now that we have a brief background to OptionsHouse, let us take a look at what makes them different:
- Streaming quotes. Not every discount brokerage offers streaming quotes, though OptionsHouse does. After filling out a little paperwork, which can be completed in under five minutes, you get access to free streaming quotes. This is invaluable for the active trader.
- Futures trading. This is a new feature at OptionsHouse, thanks to their merger with TradeMONSTER. Futures trading carries its own unique set of risks, but OptionsHouse comes in with a competitive $1.50 price for futures.
- Free virtual trading. Not every discount broker offers this, but OptionsHouse does. When you open an account with OptionsHouse you get access to a $5,000 virtual trading account. This is great for those who want to test out different strategies before putting some skin into the market.
- Robust platform. The OptionsHouse platform was a bit on the light side prior to their merger with TradeMONSTER. That is no longer the case as the TradeMOSTER addition brought over many tools that make it competitive with the best ones in the discount brokerage space. The newly upgraded platform has offerings such as more analyst reports, increased charting functionality and competitor analysis just to name a few.
- Autotrade. Not every brokerage offers this, and is not something fit for everyone. Autotrade is a feature OptionsHouse offers that allows you to automate trading based off of investment newsletters you’re signed up for. There are no additional fees for this feature, though you do need to open an account with at least $2,000 to take advantage of AutoTrade as it does feature margin trading.
- Intuitive platform. The OptionsHouse platform, while robust, is fairly simple and straightforward to use. Don’t take their focus on active traders as meaning they have an overwhelming platform – it’s quite intuitive.
As has been pointed out, OptionsHouse has carved out a place for itself in the discount brokerage space thanks to its low price model as well as some of the new features the TradeMONSTER merger brought over. Following are some of the major reasons why you should consider opening an OptionsHouse account:
- Fees. OptionsHouse boasts some of the lowest fees available, making them one of the best discount brokers for the price. Besides the flat $4.95 stock commission, OptionsHouse charges $.50 plus a $4.95 for options and $20 for mutual funds. These prices are incredibly hard to beat.
- Free Dividend Reinvestment. Where as Motif Investing does not offer this, OptionsHouse does.
- Low margin rates. If you like to trade on margin, OptionsHouse bests the average rates offered by others as you can see in the image below.
- No initial minimums. It is common for many discount brokerages to have a minimum opening balance requirement. That is not the case with OptionsHouse as you can open with anything you like. While they do recommend starting with at least $1,000 it’s not a requirement.
- Margin trading capability in retirement accounts. Margin trading, or trading on borrowed funds, is allowed by very few brokers within retirement accounts – OptionsHouse is one of those brokerages. While it is not full margin capability as you can’t borrow funds in retirement accounts, OptionsHouse does allow you (if approved) to trade straddles or spreads as well as the common long calls/puts and covered calls. This isn’t for everyone, but is a great feature to have for those who are interested in it.
- Excellent customer service. This really may not be seen as a pro, but OptionsHouse has been rated as having one of the best customer service areas in the industry. OptionsHouse also offers a nice real time chat feature for those who prefer that.
No online broker is perfect, and that’s the case with OptionsHouse. Following are some of the things OptionsHouse could improve upon:
- Mutual Fund offering. While the pricing for mutual funds at OptionsHouse is hard to beat at $20 (whereas other brokers charge around $50) they’re light in terms of what they do offer. OptionsHouse currently offers roughly 1,000 no-load mutual funds. While it’s great they offer no-load funds, they could stand to offer more. As OptionsHouse is geared more towards active traders, it’s an understandable stance though.
- Limited after hours trading. At many discount brokers you can trade during the after hours market until 8:00 p.m. EST, but at OptionsHouse you can only do so until 5:00 p.m. EST. This may not be an issue for many but is something to be mindful of if you like to trade in the after hours.
OptionsHouse Review – The Final Analysis
There are hundreds of discount brokerages to consider when you’re looking to manage your own portfolio. This can be overwhelming for many. OptionsHouse understands that and offers an excellent value for the price. They have done a great job to differentiate themselves by focusing on price and bringing in some other great features thanks to their merger with TradeMONSTER.
If price is a sticking point for you when it comes to your investing then you can hardly go wrong with OptionsHouse as they set the bar when it comes to pricing. For the right person OptionsHouse can be a good alternative to consider. If you’re more of a buy and hold type of investor you may not benefit from the tools OptionsHouse has to offer or be able to take advantage of their low rates, but they are still worthy to be considered simply off of price alone.
As with many other online brokers, OptionsHouse does offer a promotion for opening new accounts. With a new OptionsHouse account, you can trade free for 60 days, which is a month longer than any other similar brokerage in the space. With no barrier to entry, thanks to the no minimum balance requirement, it pays to get free trades for the first three months.
OptionsHouse offers a solid platform at a great price. At $4.95 per trade, OptionsHouse is a leader in the discount brokerage space.