eOption Review

Our Take

eOption targets customers who trade options and equities, whether that is occasionally or frequently. The company offers low costs with a no-frills approach to trading. That is not to say eOption doesn't have good technology. The eOption trader is set up well for options traders, and the auto trading service to automatically take up positions according to newsletters you subscribe to is unique. While long-term investors and active stock traders may not find the bells and whistles they expect from a broker, cost-focused options traders will undoubtedly enjoy the $0.10 options contract fees.

Introduction

eOption launched in 2007, but its parent company, Regal Securities, has been around since 1977. The broker’s target customers are occasional and active options and equities traders—especially those who are cost-conscious. eOption is fairly unapologetic about its focus on option traders. It keeps costs low by not loading the platform with features its traders don't use or may already have through another service.

Of course, before you jump on board for the deep discounts, it's important to note that eOption has a limited range of offerings and it's light on the tools and resources that long-term investors and beginners might want. We’ll look at eOption to help you decide if it's a good fit for your trading needs.

Pros & Cons

Pros Explained

• Great value for frequent options traders: eOption still charges a per-leg commission for options trades. However, its per-contract fee is just $0.10. That means if you trade five or more contracts per order, eOption's fees will end up being lower than nearly any other broker's.
• Easy to use browser-based trading platform: The no-frills eOption Trader platform is easy to navigate and user-friendly. You can customize the layout to suit your preferences, and the order entry interfaces are handy and intuitive.
• Auto trading from newsletter trade alerts: eOption's auto Trading feature lets you authorize eOption to execute trade alerts from the newsletter of your choice—automatically. You choose the maximum trade amount based on a dollar amount, the number of contracts, or a percentage of your account value. 

Cons Explained

• Limited range of offerings: eOption supports stocks, ETFs, mutual funds, fixed income, and options (of course). However, you can't trade commodities, futures, futures options, forex, cryptocurrencies, or fractional shares of stocks/ETFs. This narrow range of offerings will be a deal-breaker for some investors and traders.
• High account minimums for international accounts: There is no minimum to open an account with eOption if you are a U.S. resident. Otherwise, you'll need a minimum of $25,000 equity (in any combination of U.S. dollars and U.S./foreign exchange-traded securities) for an international account.
• Not much education for beginners: Most of eOption's educational offerings are aimed at experienced options traders, so newer traders may have to look elsewhere to find easy-to-understand introductory material.

Usability

The eOption website is simple to navigate, and it's easy to open an account. You simply click the green "OPEN AN ACCOUNT" button at the top of any eOption web page. You can get started with either a paper or live trading account (hover over each to learn what you can do with that type of account). There's a handy FAQ section, plus support via live chat or phone if you need help.

eOption Trader has the look and feel of a downloadable direct-access platform, but it runs in a browser. When you log in, you can opt for the "Basic" layout, designed for beginners, or the "Full" layout, which has more buttons and tabs. The available tools are easy to find, and you can drag and drop widgets (including those for order entry) to customize your layout. You can add an options strategy to a watchlist, and OptionsPlay is integrated into the platform—a bonus for active options traders.

The mobile app isn't quite as friendly or versatile as the web-based platform, but the look and feel are similar. You can trade the same asset classes on the web-based and mobile platforms, and watchlists sync between the two. You'll find streaming real-time data and news on both platforms—with fewer charting and order entry features on mobile.

Trade Experience

In eOption Trader, you can enter orders from the “Trade” and “Options Chains” tabs. Your trading costs, including exchange fees, are shown on the trade verification screen—an excellent feature that provides full cost transparency. You'll find streaming real-time quotes and news, plus a screen-top marquee that displays your watchlist tickers or open position info. The platform supports chart trading, trailing stops, and conditional orders, including one-cancels-the-other (OCO) and one-triggers-the-other (OTO) orders. However, you can't stage orders for later entry.

In addition to eOption Trader, the company offers access to the Sterling Trader Pro, DAS/WEB, and DAS/Pro Direct Access Trading platforms. All of these are designed for high-frequency traders and additional access fees may apply.

Mobile Trade Experience

The eOption mobile app lets you close or roll an existing position with a couple of taps, and you can build an options strategy in the order ticket. The app doesn't support chart trading, trailing stops, or conditional orders. While the app is sufficient for on-the-go trade monitoring, most traders will prefer the browser-based platform for their daily trading sessions.

Range of Offerings

eOption offers a limited roster of investing products: you can trade stocks, ETFs, options, and fixed income. Missing from its lineup are commodities, futures, futures options, forex, crypto, international assets, and fractional stock shares. eOption does not offer a Robo-advisory service.

Here's a recap of what you can trade with eOption:

• Stocks long and short
• Mutual funds
• Exchange-traded funds (ETFs)
• Bonds
• Simple and multi-leg options

Order Types

On eOption Trader (the browser-based platform), you can enter various order types, including market, limit, stop, stop limit, trailing stop, trailing stop limit, and OCO/OTO conditional orders. There are fewer order types on the mobile app, where you can only use market, limit, stop, and stop limit orders. You can only select a tax lot after closing out a position. The default is first-in, first-out.

Trading Technology

eOption's order router prioritizes price improvement. The router sends equity orders to multiple venues simultaneously and manages $0.005 per share in price improvement. eOption accepts an average of $0.00090 per share in payment for order flow (PFOF) on equity orders. eOption did not disclose price improvement. The firm makes an average $0.34 per contract in payment for order flow, which is lower than most.

You can automate trading signals from your choice of newsletters, but you won't be able to backtest or automate a custom strategy on the platform. eOption also does not track the performance of any of the newsletters it allows auto trading from.

Costs

eOption introduced $0 equity trading, but it still charges a base commission for options trades. Of course, the per-contract fee is extremely low ($0.10), so high-volume options traders will likely pay less overall with eOption than with other brokers. They also have a much lower than average broker-assisted trade fee. Clearing and exchange fees, typically a fraction of a penny per share, are shown on the order confirmation screen and passed on to customers.

• $0 commissions on equity and ETF trades.
• Options base commission is $1.99 per leg.
• Options per contract fee is $0.10.
• Fee on single-leg orders for 50 contracts is $6.99.
• Fee for a four-leg order of 10 contracts is $11.96.
• Covered call trade of 500 shares plus five contracts is $2.49.
• Mutual fund commission for funds outside the No Transaction Fee program is $5.00.
• Margin interest ranges from 9.45% for less than $25,000 balance to 6.45% for over $250,000.
• Account closure fee is $0.
• Account transfer fee is $60 for a full transfer and $50 for a partial transfer.
• Voluntary reorganization is $50 ($20 for mandatory). The exercise and assignment fee is $9.
• Wire fees are $35.
• Paper confirmations are $1 each—no fee for paper statements.
• Live broker fee is $15 per transaction.

How This Broker Makes Money From You and for You

With fewer brokerages charging commissions these days, it's less obvious how they stay in business. Here are some behind-the-scenes ways eOption makes money from you—and for you.

• Interest on cash: eOption clients cannot enroll in cash sweep programs. The company makes money from the difference between what it pays on your idle cash (0%) and what it earns on cash balances.
• Margin interest. The rate for eOptions margin interest ranges from 9.45% for less than $25,000 balance to 6.45% for over $250,000
• Payment for order flow: Some brokers earn money by accepting payments from market makers to direct equity and options orders to them—a practice called payment for order flow. eOption accepts an average of $0.00090 per share in payment for order flow on equity orders and $0.34 per options contract. These are both on the low end of brokers accepting PFOF.
• Stock loan program: eOption does not offer a stock loan program that generates income for its customers.
• Price improvement: eOption's order doesn't disclose price improvement.
• Portfolio margining: eOption offers portfolio margining, which computes real-time margin for stock and options trades based on risk instead of fixed percentages. Typically, portfolio margining works best for customers who trade derivatives to offset the risk of equity positions.

Account and Research Amenities

eOption offers several free research amenities, including a stock screener, an options screener from OptionsPlay (a nice platform perk), and third-party research from Hammerstone Report. The available research tools are likely adequate for experienced options traders, but other investors may be left wanting more.

Stock Screener

The stock screener has 15 prebuilt screens, or you can build your own based on the criteria you select. If you create your own screener, you can't save it for future use—you have to build it from scratch each time you want to screen.

ETF and Mutual Fund Screener

eOption does not have ETF or mutual fund-specific screeners. However, ETFs will show up in the stock screener results.

Options Screener

eOption includes screeners from OptionsPlay, where you can scan for custom ideas or check out the results from OptionsPlay. A nice feature is that you can accept an OptionsPlay trading idea and put it directly into an eOption order ticket. At that point, you can hit “Preview” to edit the order ticket and then place the trade. Note that OptionsPlay is available only with a live trading account (you won't see it with a paper trading account).

Fixed Income Screeners

eOption does not have a fixed-income screener.

Tools and Calculators

There aren't any life stage planning tools or other calculators for long-term investors (which makes sense considering eOption's target customers). Still, you have access to several free, third-party tools, including OptionsPlay, Hammerstone Research content, ratios, share data, and analyst content.

Trading Idea Generator

OptionsPlay is an automated platform that highlights potential trade ideas and strategies. Trade ideas pop up each day, and you can filter them by market cap, sector, and market sentiment. OptionsPlay is available to all eOption users at no extra cost.

News

There are quite a few news feeds on the platform, though some link to premium sources that require a subscription. You'll find news from outlets like ApolloNews, Quote Media, PR Newswire, Canada Newswire, Business Wire, Market wired, GlobeNewswire, UPI, Market News Publishing, and Fly on the Wall. You can filter the news feed by text, companies, people, topics, regions, sources, and several other categories. Articles show up with headlines and a sentence or two; click to open a new window with the complete article.

Third-Party Research

OptionsPlay and Hammerstone are the two primary third-party research amenities. If you click on the Daily Outlook tab within the eOption Trader platform, you'll get to The Hammerstone Report 4X Daily. The report has five tabs: “Early Look”, “Mid-Morning Look”, “Closing Recap”, “Street Recommendations”, and a “Weekly Calendar”. There's also analyst information, plus details on corporate events, share info, key ratios, earnings, filings, history, market summary, and market movers.

Charting

The charting in eOption Trader is basic and clean. You can customize your chart by type (line, area, OHLC, candlestick, or hollow candle) and a time-based or activity-based period. There's a decent list of customizable technical indicators, and you can compare a second symbol on the same chart. It's easy to overlay events (earnings, dividends, and splits) on a chart, and you can toggle a switch to view a volume histogram. eOption's chart trading feature lets you double-click anywhere on the chart to launch a pre-filled trade ticket. Alternatively, you can click the “Trading” tab at the top of the screen to view a trade ticket or option ticket for the active symbol.

Cash Management

eOption does not offer a cash sweep program that automatically transfers uninvested cash into a money market fund.

Fractional Dividend Reinvestment Program (DRIP)

eOption does not offer a dividend reinvestment program.

SRI/ESG Research Amenities

eOption does not support screening based on environmental, social, governance (ESG) or socially responsible investing (SRI) factors.

Portfolio Analysis

Positions and performance are displayed as a heat map to give you a quick visual of your portfolio. However, eOption doesn't allow you to consolidate outside holdings for a complete picture of your assets. Margin, buying power, and gains and losses display in real-time; dividends and interest update overnight. If you're after advanced analysis, you can export the data to Excel or use another tool.

Education

The education available from eOption focuses primarily on options trading. Articles and videos from the Options Industry Council (OIC) cover various options-related topics, including the basics, a long list of options strategies, and advanced concepts (e.g., volatility and the Greeks). There are a handful of articles on general trading, plus a blog and a basic glossary.

You won't find life stage planning tools or other long-term calculators, but eOption does offer a free paper trading platform with delayed data. 

Customer Service

• Phone line available Monday-Friday, 8 a.m.–6:30 p.m. Eastern time. Phones are answered very quickly (the company reports an average hold time of ten seconds).
• Online chat for current and prospective clients is available via desktop only.
• Live broker available from 8 a.m. to 6 p.m. Eastern.
• No chatbot.
• Residents of Austria, Australia, China, Germany, Ireland, Luxembourg, Mexico, Netherlands, New Zealand, Singapore, South Africa, Switzerland, and the U.K. can open eOption accounts. For foreign accounts, a minimum of $25,000 equity (in any combination of U.S. dollars and U.S./foreign exchange-traded securities) is required.

Security and Reliability

eOption's security is up to industry standards:

• Two-factor authentication is available on the web and mobile platforms.
• Excess Securities Investor Protection Corporation (SIPC) insurance is provided by Lloyd's of London with an aggregate loss limit of $150 million.
• The company maintains a cybersecurity insurance policy.
• eOption didn't report any severe or widespread platform outages nor data breaches.

Transparency

eOption's rates and fees are easy to find and clearly outlined and on its website. Click on the "Rates & Fees" tab at the top of any page to view pricing details for commissions, margin rates & requirements, ACH/checks/wires, retirement accounts, and miscellaneous fees. The pricing is simple to understand, and your trading costs, including exchange fees, appear on the trade verification screen. This is a helpful feature more brokers should offer.    

Available Account Types

eOption offers all the common account types, including:

• Individual and joint taxable
• Trusts
• Custodial
• Corporate
• International
• Traditional individual retirement accounts (IRA)
• Roth IRA
• Rollover IRA
• Simplified employee pension (SEP) IRA
• SIMPLE IRA
• Coverdell education saving account
  

The Bottom Line

Unlike many of its larger competitors, eOption doesn't try to serve every type of investor in the financial universe. Instead, eOption primarily targets options traders, and it offers excellent value for those who are active and comfortable choosing their own trading strategies. Frequent options traders will find useful strategy scanning tools plus low costs. eOption periodically explore expanding its offerings to attract a wider group of investors, but then it returns to the basics of low-cost options for options traders. If you trade more than four options contracts at a time, the price ($0.10 per contract + $1.99 per trade) is hard to beat. 

While eOption is a good choice for active options traders, you'll have to look elsewhere if you want to trade forex, futures, commodities, or crypto. Also, it's not the broker for you if you're a passive (long-term) investor, need handholding, or want a robo-advisor. All that said, active option traders will want to take a close look at eOption, especially if they plan to trade at least five contracts at a time.

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