My eOption Brokerage Account Review for Stock and Option Trading 2011

eOption Logo
eOption Logo

Intro

eOption is the newest online discount brokerage services that offers fast and accurate execution capabilities on all major exchanges for stock and option trading. EOption provides simple order entry and ultra low per contract option pricing for traders and investors. As a diversified financial services firm, eOption also offers to trade stocks, mutual funds, ETF, CEF, fixed income products, and no-fee IRAs. To trade stock, it only cost $3.00 per trade with unlimited shares. To trade option, it will cost $3.00 per trade plus $0.10 per contract with unlimited shares. It also offers cash management system such as checking, debit card and online bill payment. EOption is offering several electronic trading platforms for their clients: web based, Auto Trading and Sterling Trader Pro (Software). As one of top discount brokers, eOption is continuously updating their trading technology and retaining competitive commission rates. There is no mobile application support currently. You can access the online webpage through www.eoption.com.

 

History & SIPC protection

eOption was established in 2007 as a division of Regal Securities Inc, member FINRA/SIPC. Regal Securities Inc is a Chicago area broker-dealer since 1975. Although eOption is new in online brokerage industry, it has 30 years in option trading experience. It currently uses Penson Financial Services Inc as its clearing firm to hold the client asset. For protection, Penson Financial Services Inc is a member of SIPC & FINRA.SIPC protects against the insolvency of a brokerage firm, but does not protect against any market loss. As typical SIPC insured protection, it will cover the securities of customers of its members up to $500,000 of which $250,000 can be cash. Additional supplemental coverage is provided by Penson Financial Services insurance using London Underwriter up to $150 million ($2.15 million cash) per eOption account.

Product & Services Offerings

The following is the standard pricing or commission fee of eOption brokerage account:

  • Products: Stocks, foreign stocks, bonds, mutual funds, options, etfs
  • Market Orders: $3.00 per trade
  • Limit Orders: $3.00 per trade
  • Broker Assisted Orders: $9.00 per trade
  • Mutual Funds: $14.95 per trade or $5.00 per trade for periodic trade
  • Options: $3.00/trade+$0.10/contract
  • Minimum to Open: $0; $2000 for margin
  • Inactivity Fee: $0.00
  • IRA Maintenance: $0.00
  • Some Other Fees: Tender Fee: $25.00 DTC Out: $25.00 per security. ACAT Out: $50.00.
  • Maximum Margin Rate: Based on on-site table


Opening eOption Account

Opening account is straight forward; you just need to fill the online application through eOption website. You can open various account types such as individual, joint, and Business. There is no support for Individual Retirement Accounts (IRA) either traditional or Roth. For individual account, they may require you to submit driver license identification copy either by fax or regular mail. You need to fill the web based application form online. Then, you will need to print and mail in or fax the application form. This manual process definitely a hassle compare to other online brokerage. If you fax your account, it will take 1-2 days to receive the welcoming email from eOption. Once you are done, you’ll need to wait for their approval. Then, you can setup how you want to fund your account.

As many typical online brokerages account, there are 4 different ways to fund your EOption account:

  1. Wire Transfer – usually can be done same business day
  2. Transfer an account from other brokers .This will take more than 10 business days
  3. Mailing a check will take 5 business days
  4. Electronic Transfer (ACH transfer) will take up to 2-3 business days.

To set up the ACH transfer, you will need to fill in the ACH form and fax the form for approval. The ACH transfer will be done manually by phone or possible email. You will need to call eOption to transfer any fund. This feature will definitely provide another hassle. This manual ACH transfer structure is very similar to Lightspeed Web Trader.

For International or Foreign investor or non US resident, you will need to print the application and fill the form manually. There is no online support for this time. After filling the application form, you will need to mail in the form with your identification. You will need to submit W-8Ben and ID or Passport along with your application through regular mail or fax. The minimum balance to open an account is $5,000 for cash account. For International accounts that wish to trade uncovered puts, the security deposit will be an additional $10,000.

Both free and paid cash management services are offered for account holder, including checking account. Incoming and outgoing ACH are provided as well. There is also option for stock dividend reinvestment.


account view
account view

Commission fees

What I like about eOption is its flat rate commission structure. Also, it is an online discount broker with straight forward commission pricing. The option trading fee is one of the lowest.

For stock trades, all market and limit order stock trades are $3 per trade. This means to buy stock online, it will only cost $3.00 per trade. The trade doesn’t have any restriction in term of shares price. For Pink Sheet and Bulletin Board, it will cost only $3.00 per trade only for limit order. Broker assisted trades are $9 per trade. For foreign stocks, you will be charged $29 per trade. This foreign stocks trading must be placed with a broker; there is no additional broker-assistance charge. For extended hours trading, trader will be charged $25 per trade up to 5,000 shares. For over 5,000 shares trades, it will cost $0.003 per share per trade (first 5,000 is $25). For example, if trader buys 6,000 shares after hours, it will cost $28.00 commission fee per trade.

You also can place the following stock order:

  • Market order
  • Limit order
  • Stop Loss order
  • Stop Limit order
  • Trailing Stop Loss $


Web based Stock Order View
Web based Stock Order View

For Options trading, Options trades will cost $3.00 plus $0.10 per contract. To trade option such as buy option and/or sell option, it will have $3.00 ticket fees. This ticket fee is very comparable to other discount brokerage. Any exercise or assignment costs $9. For example, a trader buy a 1 contract option will cost $3.10 commission and if a trader buys 10 contracts option, it will cost $4 commission fee.

For mutual funds, all mutual funds will cost $14.95 per trade. For Periodic Invest – Withdraw, it will cost $5.00 only.

For bond trades, the first 25 bond will only cost $5 per bond. Each additional bond will cost $3 per bond. There is a minimum of $39.00 per trade.
Other products, there are no offerings of futures and forex trading at the present time.

For IRA account, eOption offers a no setup fees or maintenance fees for IRAs, although it does have a termination fee.

If you like direct access trading, you might like eOption. It also has various direct access platforms such as Sterling Trader Pro, RealTick, Bon Trade Solutions and Omni Pro.


Sterling Pro view
Sterling Pro view

Advantages & Disadvantages

Pros:

  • One of the lowest cost brokers online with $3.00 / trade.
  • No setup fee & maintenance fee for IRA account
  • Supports international accounts (Accounts can be created for people outside the USA)
  • One click execution of multiple leg orders.
  • Option fees is one of the lowest
  • Support after market hour trading
  • There is no minimum balance to open an account.
  • Offer various cash management services such as debit card & checking account

Cons:

  • ACH transfer will be done manually through phone
  • Additional charges of $15 per month for streaming quotes and live charts
  • Need to fax or mail the application form
  • No offers of forex or futures trading
  • No mobile app support at this time
  • Very little research report
  • After market hour trading is expensive compare to other brokerage

Other customer’s complaints from research:

  • Issue with option chains which are not user friendly and often wrong
  • Poor website design for trading
  • Issue with Live Help service connection
  • Balance is only updated overnight. There is no up to date account balance during trading hour.
  • Trading system is down from time to time
  • Issue with complex option trading such as Iron Condors or Butterflies
  • General issue with live streaming especially on Option Trades

Final Thoughts

eOption is definitely not for beginner trader. If you just begin to learn trading, you might want to try other beginner friendly brokers such as Zecco, Vanguard, Fidelity, Scottrade & Firstrade. If you are patient, I would recommend you mainly to use eOption for trading stock and IRA account. Commissions and fees are among the lowest of any online discount broker. The commission fee is straightforward with $3.00 per trade. If you trade mutual funds, eOption also offers $14.95 per trade. EOption offers a standard web based trading platform and a desktop software application or direct access tradings such as Sterling Trader Pro, RealTick, Bon Trade Solutions, and Omni Pro. There is no fee to open IRA account, and there is no IRA maintenance fee as well.

EOption has some very good qualities as one of online broker. EOption should improve their registration process of new account since new customer need to send the application form thru email or mail. The stock trading engine is one of the better platforms out there in online discount brokerage. Option trading platform is comparable to other discount brokerages and the option trading cost is cheaper than average broker. At the same time, the charts and research tools are a little deficient. Any cost conscious investors should give EOption a try.

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4 comments

Hawe 5 years ago

Would you please give a review which one do the best for desktop software application or direct access tradings, between Sterling Trader Pro, RealTick, Bon Trade Solutions, and Omni Pro ? Thanks a lot.


chan0512 profile image

chan0512 5 years ago from Camarillo, CA Author

I'll try on my next review. Not sure when though, I'll try in near future I hope. Please check back in future.


Hawe 5 years ago

Ok, many thanks. How about direct access fee in eoptions ? So that we can place order from options chain directly. Thanks.


chan0512 profile image

chan0512 5 years ago from Camarillo, CA Author

Hawe,

eOption offers delayed, real-time, and streaming quotes. There is a charge of $15 per month for streaming quotes if you don't execute 10 or more trades per month. Otherwise it is free. As typical broker, eOption will pass through exchange fees, TAF charges, and SEC fees to customer.

Please check with eOption CS for details if you trade actively, they may offer better pricing etc.

Hope this help.

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