PROS / E*TRADE's options trading tool is great for beginners placing basic trades and experienced traders working with complex orders.
CONS / The fee for an option exercise or assignment is more than with many other services.
VERDICT / E*TRADE's online platform is ideal if you are a beginning or an advanced trader.
Editor's Note: E*TRADE has changed it pricing. Commissions on trades are now $6.95, and high-volume traders will be charged a commission of $4.95. Our current review and matrix reflect the old pricing, but they will be updated shortly.
The E*TRADE online platform comes with useful and easy-to-use tools to help you watch, trade and monitor stocks and the overall performance of your portfolio. This online stock trader provides mobile trading apps for more devices than with most brokers, and the apps have impressive features that few other services offer. E*TRADE's fees are average for the online options trading industry, and local branches allow for personal interactions where available.
With E*TRADE, you can invest in stocks, ETFs, mutual funds, bonds, futures and forex in addition to options. With stock options trading, you pay the standard $9.99 trade fee plus $0.75 per option contract. That $9.99 fee drops to $7.99 when you make more than 150 trades per quarter. When you start trading a large number of contracts, the per-contract fee makes more of a difference than the trade fee, and at $0.75 per contract, E*TRADE is cheaper than many other services, though not the cheapest options broker. The fee for an exercise or assignment is $19.99, which is one of the higher prices we saw for these fees, but the $25 broker-assisted fee is average.
For margin accounts, you must maintain a balance of $500, which is lower than average. The interest rate is calculated from the base rate established by E*TRADE, which is subject to change. For a balance less than $25,000, the rate is 8.19 percent and decreases as the balance increases. Accounts with a balance more than one million dollars receive a rate of 4.14 percent.
E*TRADE provides some of the best options-specific order tools we have seen. Though most services provide easy-to-use basic order placement tools, E*TRADE's tools make complex order placement easy. With the option trade tool that includes preprogrammed option strategies, you can easily place basic, spread, buy-write, butterfly and condor orders. You can also easily monitor your options positions, orders and alerts.
E*TRADE provides portfolio and risk analyzers. The portfolio-analyzer tool checks for portfolio diversification by sector, style, stock type and world region. The risk analyzer evaluates your risk and rewards, charts your performance against market indexes, runs what-if scenarios and performs stress tests of worst-case scenarios.
In terms of options research, you can create your own strategy profile by target price; investment amount; time frame; volatility; and market outlook, such as bullish, bearish, neutral or volatile. E*TRADE also provides an options analyzer, a probability calculator and an options screener. The mobile trading apps do everything you'd expect, allowing you to keep track of your watchlists, monitor stocks, trade options and keep track of your positions. Further, it has some nice additional features. With check depositing, you can take a picture of a check and directly deposit it into your investment accounts. There are apps for Android phones and tablets, the iPhone and iPad, Amazon Fire phone, Windows Phone, and Kindle Fire, which gives you more mobile options than with any other service we saw.
There are local branches in 17 states where you can get face-to-face help, or you can contact 24/7 customer support via telephone, live chat and email. The website has dozens of video tutorials, online educational courses, live webinars, and general education about investing and trading.
This online discount broker's service and options trading system are a great choice. The preprogramed strategies allow you to make trade decisions based on your market approach. You can create your watchlists and order basic or complex orders. The fees for trading are standard, and with all the excellent features, E*TRADE is a good choice for online options trading.