Being the best options broker is all the buzz lately because options trading is a hot trend amongst traders. Compared with the old days where these strategies are seen as risky and downright gambling, the perception has literally took a 180 degree turn because options trading is now deemed as a great way to hedge your positions and reduce volatility.
You already know I love TradeKing as a traditional stock broker, but how does it hold up with options trading? Find out in this review.
TradeKing’s Fees Comparison
Other than great customer support, TradeKing’s low commissions is a major draw for customers. With options, the fees are $4.95 + $0.65 per contract. Most people, when they first start out, don’t pay attention to the per contract price and that’s a mistake. The latter price, while seems insignificant, will actually take over and be the bulk of the trading cost. Let me give you an example.
This is a screen shot I took that highlights a few options prices of Freeport McMoran (FCX). As you can see, one call option contract, which entities you to buy 100 shares of a stock could be as low as $2.02. Therefore, if you buy 10 contracts, the trading cost will be $4.95 + $0.65 x 10 = $11.45. This, while still pretty low, is much more than $4.95. Furthermore, option contracts are sometimes as low as $1 or even $0.10 so the per contract price is very important. In this area, TradeKing really shines because other brokers charge as much as double the commission.
Interface
One of the major drawbacks of many online brokers is the lack of thought in its interface. Not so with . When you buy a basic call or put option, you can either type in the actual symbol, or find the option by just typing in the symbol of the stock, the expiration date and strike price.
In addition, more advanced option strategies such as Covered Call, Protective Put, Spread, Straddle, Strangle, Combo, Butterfly, Condor, Double Diagonal, Collar can all be done within one screen, saving you the hassle of manually buying and sell the options and possibly making mistakes.
Education
I know many of you at this point are scratching your head with all the mumbo jumbo of all those terms. actually have a pretty easy to understand tutorial that can teach you options trading with an explanation of all the technical term. For example, it explains that covered calls are executed by traders who are neutral to bullish, and are willing to sell stock if it reaches a specific price. It goes on to explain how to set it up, what the risks are, how you can make money as well as expert tips among others. Here’s a little more of what they tell you about covered calls.
Personally, I found the education extremely helpful. Not only was it a refresher but I also learned a thing or two about the expert tips.
TradeKing Trader Network
The TradeKing Trader Network will prove to be quite useful for those that like to get trading ideas from others. Unlike other communities where you are just listening to everyone BS about a particular stock or its options, this one lets you actually peek into their actual trades to see if they are putting money where their mouth is. With some trades, the traders will write in what’s known as Trade Notes so you can get further insight into their decisions. I looked into several, and while some comments are really short, others are incredibly insightful and logical.
Bonus
For a limited time, is offering a special report for options trading (click on the banner for it).
2nd Bonus
As I’ve talked about before, TradeKing is offering up to $150 in transfer fees for you to switch to them. Based on my experience, it’s worth it to switch even without this but with the transfer fee offer, there’s really no reason not to take advantage.
3rd Bonus (and the Best One Yet)
From now until the end of November, TradeKing will give you $50 for free when you sign up for an account with them. Requirements are:
- Fund the account with $2,500
- Make the First Trade
- Get the Deposit
- Click the Link Below to Take Advantage
{ 1 comment… read it below or add one }
Hi,
I must say that I am very pleasantly surprised to find a top personal finance blogger mentioning options in a positive light. As you already understand, options are risky investments only when made by investors who take too much risk.
Options were invented as risk-reducing tools, and that’s how I encourage people to use them.