OptionsHouse is a bargain for seasoned investors, but isn’t the best option for less experienced traders.

Optionshouse doesn’t spend much on advertising, so it’s not a particularly well-known name within the online stock trading industry. The company started out in 2005, attracting experienced investors active in Options trading (and who demanded lower fees), so the company has never really been in the business of reaching out to beginner investors. Nevertheless, it offers most things the other major online stock brokers offer, and at rock-bottom pricing.

Stocks trade at a flat fee of $4.95, and there is a $0 minimum deposit to join. Options trade at $4.95 + $0.50/contract, and mutual funds are capped at $20. All the other large online stock brokers offer trades for $8-10 on average — around twice the amount of OptionsHouse fees. It offers every account type other online stock brokers generally provide (individual and joint, all IRA types, trusts, partnerships, and more), a solid platform with a decent user interface, free streaming quotes, and more.

OptionsHouse is largely still targeting investors that already have a pretty good idea about what they’re doing, however.The trading platform is difficult to figure out, lacks many basic functions the other online stock brokers offer, and it doesn’t have a good base of tutorials from which users can learn how to use its service, and how to get started in online stock trading.

While it still has some way to go in terms of customer service, the U/X of its platform, educational and research libraries, its pricing structure makes OptionsHouse one of the best options out there for trading. If you already know what you’re doing and don’t need a robust education center or customer service, OptionsHouse is a great online stock broker that won’t hit you over the head with high fees and commissions. For intermediate investors that look at price to determine which broker they would go with (and who are also less interested in purchasing mutual funds or trading internationally), OptionsHouse is usually juggled against Ally Invest.

OptionsHouse and TradeMONSTER announced a merge in May 2014, and OptionsHouse is still feeling the effects: The company has been slow to improve on its customer service, trading platform, and mobile app. Another acquisition finalized in late 2016, when E*Trade acquired OptionsHouse, but the CEO announced there will be no change to OptionsHouse pricing or trading platform. Only time will be able to tell.

The Specs

Price – Stock Trades$4.95
Costs & FeesOptions: $4.95 + $0.50 contract
Mutual Fund Trades: $20.00
Broker Assisted Trades: $25.00
Account Fee: $0
Minimum Account balance: $0
Proprietary Index Option Product FeesS&P 500 Index
$0.53
S&P 500 Index (Weekly)
$0.53
S&P 500 PM Settled Index
$0.40
Russell 2000 Index
$0.18
Russell 2000 Index (Quarterly)
$0.18
CBOE Market Volatility Index
$0.36
S&P 100 Index (American-style exercise)
$0.40
S&P 100 Index (European-style exercise)
$0.40
Dow Jones Industrial Average Index 1/100
$0.18
NASDAQ 100 Index
$0.14
Misc. Fees$15.00 Bond Trade Fee
$15.00 Treasury Trade Fee
N/A CD Trade Fee
N/A IVR Trade Fee
$0.00 IRA Annual Fee
$60.00 IRA Closure Fee
N/A Forced Margin Sellout Fee
$30.00 Returned ACH Fee
$30.00 Returned Wire Fee
$75.00 Stock Certificate Processing Fee
$235.00 Stock Certificate Delivery Fee
$2.00 Paper Statement Fee
$0.00 Paper Confirmation Fee
$25.00 Domestic Wire Fee
$50.00 International Wire Fee
Minimum Deposit$0
Account TypesFull service brokerage (stocks, bonds, other fixed income assets)
7,625 Mutual Funds (Load); 4,650 (No-Load)
Options
Futures
IRA (SEP, Simple, Individual 401K, Roth, profit-sharing)
Coverdell Education Savings Account (ESA) for minors
Business Accounts (sole proprietorship, partnership, or corporation)
Accounts for Investment Clubs
Best ForExperienced investors
Options traders
Traders looking for low fees
Not ForThose looking for Commission-Free ETFs (OptionsHouse does not offer this)
Beginner investors
Those who often utilize customer service
Mutual fund traders
International traders
Margins6.25% Under $24,999.99
5.75% $25,000.00 to 49,999.99
5.00% $50,000.00 to $99,999.99
4.50% $100,000.00 to $249,999.99
3.75% $250,000.00 to $499,999.99
3.00% $500,000.00 to $999,999.99
1.75% Above $1,000,000.00
ServicesCustomer Service (phone, e-mail, chat) + 8 a.m. – 8 p.m. ET
Branches0 (E-Trade’s offices can potentially be used from 2017)
PlatformWeb platform
Mobile app (Apple & Android)
Standout FeaturesVery low trading prices
Virtual Platform
Free streaming quotes
No minimum deposit to open a cash or an IRA account
ToolsstrategySEEK
tradeLAB
EducationWebinars
Free seminars on Options trading
PromotionsTrade stocks and options commission-free for 60 days when you open a new Individual, Joint or IRA account with a minimum of $5,000.
Awards4.5 / 5 - Barron's 2016 Best Online Brokers
5/5 for Options Trading and Active Trading (StockBrokers.com)
#1 Options Trading Platform 2016 (Investor’s Business Daily)

The Claim

OptionsHouse promotes its low prices coupled with top-rated technology; consistently maintaining a pricing edge over its competitors while still offering everything you actually need to trade effectively.

Is it True?

Yes. OptionsHouse undoubtedly beats out all the other big names in the online stock trading industry when it comes to its flat-fee trading structure ($4.95), Options trade base prices ($4.95), and a $0-minimum deposit requirement. Ally Invest does beat out OptionsHouse in terms of Mutual Fund trade fees ($9.95 and $20.00 respectively), but OptionsHouse mutual fund fee is still lower or comparable to most in the industry ($49.95 with Fidelity, $49.99 with TD Ameritrade, and $17 with Scottrade). It is important to note, however, that the $4.95 rate applies to anything up to 50,000 shares; if customers have an order exceeding 50,000 shares, the order will be subject to an additional $4.95 commission charge. Despite this, OptionsHouse still leads the industry, along with its competitor, Ally Invest, for cheapest per trade fee.

The platform OptionsHouse uses is powerful, but it is not for the timid or beginner investor. The platform provides a great overview of market trends and a layout of all your stocks, but understanding where to click to even toggle the settings would be difficult for beginner investors to understand.

But if you are a beginner investor – don’t be too nervous. One of the things this seemingly convoluted platform offers is a virtual trading platform that you can “practice” on without using any actual money. No other online trading platform offers this service. The learning curve is a bit higher than other platforms that are more user-friendly, but once you get over the hump, OptionsHouse really delivers on a robust trading platform – it just happens to be designed for those who are already experienced traders.

Nevertheless, basic functions are easy: pulling up charts and quotes, viewing pre-filled tickets, and submitting trades are all very easy to do. If you’re looking for market research and data, you’ll be disappointed, though. OptionsHouse only has about 30 technical studies on market stuffs compared to the hundreds offered by other online stock brokers. Beyond this, the investment research is severely lacking: no third-party research or reports, no comparison function, no SEC filings, no balance sheet viewing – all items offered by the platforms of the largest online stock brokers like E*Trade and TD Ameritrade and Scottrade.

Our Deep Dive

  • Costs and more: OptionsHouse shines on price – the $4.95 flat stock trade fees plus $0.50 per contract, $20.00 mutual funds, $4.95 Options Base fee, with no barriers to join or maintain an account makes it attractive among investors who want to decrease the fees associated with online stock trading.
  • Learning curve: This is going to be higher than normal. While it’s quick to open an account with an online broker that doesn’t require a minimum deposit, learning how to use the platform will be more difficult for new or beginner investors. Intermediate investors might spend more time looking around for things that simply aren’t offered – a major drawback to the OptionsHouse platform. Users would want to turn to E*Trade or Scottrade for a better learning experience in both beginner investing and tutorials on how to use the trading platform.
  • The Platforms: Beginner traders might enjoy the virtual trading platform offered by OptionsHouse, where users can tinker around with trading scenarios without using actual money. But forget about finding quality tutorials or helpful documents on how to use either the virtual or regular trading platform. Experienced investors will take longer to get used to customization and will have access to only a limited amount of tools to utilize for stock trading data and metrics.
  • tradeLAB: OptionsHouse uses tradeLAB to gain market insights that can analyze plausible market scenarios to help customers make good trading decisions before they actually buy or sell anything. Other brokers utilize comparable tools, and this feature in the trading platform allows OptionsHouse to claim it utilizes “top-rated technology”.
  • strategySEEK: The strategySEEK tool allows users to scan market data in real-time to create stock trading strategies that suits them based on a variety of criteria. Again, this is part of OptionsHouse’s “top-rated technology” that is also offered by every other major online stock broker.
  • Penny Stocks: OptionsHouse charges $0.005 per share of stock traded for stocks priced $2.00 or less that are not options-eligible. This is a better price compared to Scottrade’s $7 per trade rate + $0.50% principal for any stocks that actually trade under $1.00. The prices with its main competitor, Ally Invest, are also not as ideal – Ally Invest offers penny stocks valued at less than $2 per share at $4.95, + $0.01 per share (up to 5% of trade value).
  • M.I.A.: OptionsHouse does not offer commission-free ETFs or Forex investing. This all may change with E*Trade’s acquisition, but for now, it’s not an option.

Cost Rundown

If you’re looking for a decent brand in the online stock trading industry that offers the lowest fees for stock trading, you’re likely looking at OptionsHouse or Ally Invest. OptionsHouse’s low fees, low margin rates, and comparable pricing elsewhere make it vastly competitive among the top tiered and more expensive online stock traders on the market.

While its mutual fund fees aren’t great, its Options Base fees are also $4.95, making it a fantastic online stock broker for those trading in this realm. Active Options traders are also rewarded with OptionsHouse’s Dime Buyback Deal, where the company removed commission charges on closing short options contracts of $.10 or less.

Cheaper (or Free!) Alternatives

In terms of price-per-trade the only alternative among the big online stock trading brands would be Ally Invest. Cheaper alternatives would be Interactive Brokers which doesn’t charge any fees, but instead takes a $0.005% of a stock’s trading fee per share. The online broker Just2Trade only charges a $2.50 flat fee per trade, but requires a $2,500 deposit to start trading. These two online brokerages are relatively unknown and really do not stack up to the big online stock brokers in the industry. In terms of brand recognition among the top rated and most used online brokerages, OptionsHouse wins (along with Ally Invest) when it comes to the best price, lowest fees, and lowest commissions.

The Competition

  • Ally Invest: $4.95 flat free trade plan; $0 minimum deposit. Ally Invest has gone through several evolutions since its formation in 2005. It has now emerged as a formidable competitor with affordable rates that are attractive to new investors.
  • Scottrade: $7.00 flat free trade plan; $2,500 minimum deposit. Scottrade is one of the more expensive online brokers out there, but it offers cheaper trades without a tiered pricing system. It’s also one of the few online brokers with physical brick-and-mortar stores in nearly every state.
  • E*Trade: $6.95 flat free trade plan; $500 minimum deposit. E*Trade is largely recognized by its humorous television commercials, and while it is not the most affordable, it markets to a large audience and therefore maintains a valuable customer-oriented presence similar to Scottrade.
  • TD Ameritrade: $9.99 flat free trade plan; $0 minimum deposit. TD Ameritrade is known for being a well-rounded and affordable broker but also one of the more expensive brokers out there in terms of its trading fees.
  • Merrill Edge: $6.95 flat free trade plan; $0 minimum deposit. Owned by Bank of America since 2010, Merrill Edge is affordable and would be beneficial for those who already have various BoA accounts.

What Others Are Saying

  • Fortune reported on July 25, 2016 that E*Trade would purchase OptionsHouse for $725 million to become more competitive in derivatives trading. E*Trade’s decision was based on OptionsHouse’s numbers in options trading – “OptionsHouse executed 27,000 daily average revenue trades for the twelve months ended June 30, of which 63 percent were in options.”
  • Customers on Yelp and ComplaintsBoard.com seem to complain about customer service, the non-user friendly platform, and a glitchy mobile app.

The Bottom Line

If you want the lowest fees offered by a reputable trader, Optionshouse is going to be your best bet. It isn’t the best in terms of customer service or educational resources, and its trading platform is difficult to learn (the mobile app certainly has room for improvement, too), but it’s a great choice for seasoned investors who want affordable Options trading, and who don’t care about mutual funds or international investments.