OptionsHouse Review From a Pilgrim’s Perspective

by Neal Frankle, CFP ®

It doesn’t matter if you’re a skilled options trader or just starting out. This OptionsHouse review will be very useful to you. That’s because the company you trade options with could be the difference between success and failure.

Of course successful options traders need low execution costs but they need lots more than that. Over the course of this review, we’re going to look at all the success factors that translate into greater profits for traders and see how well (or poorly) OptionsHouse fits the bill.

What is OptionsHouse?

This is a company founded, designed and managed by professional options traders. Unlike other brokerage firms that provide an options platform, the folks at OptionsHouse built the company with the options trader in mind from the ground up. It was founded by PEAK6 Investments which is one of the largest options-trading firms in the United States.

(They are a member of SIPC which protects against insolvency. That’s good but of course it won’t shield you from market loss.)

Their support, technology, pricing and tutorials are all engineered to help options traders. Also they are structured to support traders at most levels; beginner, intermediary and advanced.

PRICE

OptionsHouse has a pretty friendly pricing schedule that works no matter how active (or inactive) you are. If you trade less than 10 contracts, you can select the “5 for $5 option”. If you buy more than 5 contracts, the cost is still $1 for each additional contract. If you do the math, you’ll see that the average cost is $1 per contract. Not bad.

If you buy more than 10 contracts, you can select option 2. That pricing is $8.50 + .15 cents per contract. So, if you buy 11 contracts for example, the total cost would be $8.50 + $1.65 (11 x .15 cents) or $10.15 for 11 contracts. Every additional contract is .15 cents so you can see how inexpensive it is.

The nice thing is you can change your pricing plan as your trading evolves.

As you can see from the charts below, OptionsHouse beats everybody on price. Need more sugar? OptionsHouse won’t charge you a penny more even if you need to speak to an actual broker. Very civil.

PERFORMANCE AND TOOLS

Low prices are nice but that’s far from the most important success factor when it comes to trading options. What good is it to save a few bucks on commissions and lose hundreds or thousands by using untested strategies and having no risk assessment? This is where OptionsHouse shuts down everyone else.

This company gives you the control, speed and customization you need to be successful. In fact, Barons rated OptionsHouse as one of the Best for Options Traders. And the OptionsHouse mobile platform was rated the highest among all brokers for very good reasons. The tools they offer simply blew me away.

Here is just a sample of a few of my favorite tools they offer:

  • Risk Viewer – This was a tool developed by PEAK6 traders for their own accounts. They wanted to see what kind of risks they were taking in their own portfolios. Once they had a great program to do that, they made it available to investors using OptionsHouse. And they have great tutorials that explain how to use each tool. I viewed their tutorials and found they made it simple to see how much risk you are taking in your portfolio. Useful.
  • Streaming Charts and News – Information is the life-blood of a trader and clients at OptionsHouse get all the information they need free of charge.
  • Probability Calculator – How would you like to enter in a price point for a given stock and learn what the likelihood of that stock hitting that price by a given date? With Probability Calculator that’s exactly what you get. This is invaluable to anyone trading options. Using this tool you can get an idea (not a guarantee) of whether or not you are making a wise calculated risk or barking up the wrong tree. Thank you OptionsHouse.

For example, assume you plugged in the data and OptionsHouse Probability Calculator told you that you only have a 10% chance of making a profit. Would that information be helpful to you? You better believe it.

  • Trade Generator – Let’s say you were absolutely convinced that a given stock was going to rise by 10% over the next 6 months. Of course you could buy the stock outright but there could be better ways to profit more handsomely. The Trade Generator asks you what stock you are interested in and what your sentiment is. Then the tool will generate hundreds of options trades that fit your needs. And this tool can potentially make you money if you think a stock is going down or even if you think it’s not going anywhere.

These are just a handful of the tools that made me sit up and notice. There are many more that OptionsHouse has available at their site as well.

Who is OptionsHouse a good fit for

OptionsHouse is a good company to use if you are an active trader (meaning you trade more than once a month) or plan to be one. It has unsurpassed tools, functionality, speed and pricing. What more could you ask for?

Also, if you would like to learn how to trade options or simply improve your skills, I can’t think of a better alternative. You can open a “virtual account” and start trading without taking any real risk. This way, you can familiarize yourself with all the tools and learn how to maximize potential gain for the least amount of risk. There is of course no guarantee. Any time you invest there is a chance of loss. Options trading is inherently very risky no matter how you slice it.

But having said that, I will tell you that the virtual account gives you all the tools and functionality and even all the data that is available to actual investors. The only difference is that the quotes are delayed for virtual accounts. But this still gives you a great opportunity to test your trading strategies and hone your skills.

The tools, platform and technology are usable for new traders as well as advanced investors. And all you have to do to avail yourself of these tools is sign up for an account – you don’t even have to fund it.

The real reason I like OptionsHouse

I’ve talked to a number of people who trade options and I asked them a simple question, “What is the #1 reason people fail to make money when they trade options?”

They all came back with the same answer; people who fail are people who don’t’ really understand the risk they are taking. Risk is impacted by the volatility of the underlying security of course but that’s not all. The size of your positions and trades and the strategies you use also impact your risk.

The Risk Analyzer is a wonderful tool that can help you get a sense of the risk you are taking. It’s nice to know you have another set of eyes reviewing that risk. Another thing I like about the Risk analyzer is that it offers suggestions on how to reduce that potential risk. Not bad at all.

How does OptionsHouse stack up against the competition

OptionsHouse offers a great balance of high tech, quick execution, lots of functionality, lost cost and fantastic tools. There are probably cheaper companies out there but none with this kind of value proposition. And other firms might offer more tools but you probably don’t need those expensive bells and whistles.

For me, the greatest selling points are the tools and the fact that the company was created by a professional proprietary options trading firm. That’s important because they have field-tested tools that they use themselves. It’s nice to know you are dealing with people who put their money where their mouth is. For me this is a huge differentiator and plus. I also love the super low costs but that’s icing on the cake.

Right now, OptionsHouse is offering new customers 100 free trades and if I were an options trader, I would jump on this quicker than I would an ice cream cone on a hot July afternoon.

Do you trade options? Where? What do you like/dislike about them?

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{ 3 comments… read them below or add one }

Paul April 7, 2013 at 8:36 PM

I use optionshouse and do not trade options. So why use them? First, commissions are low; second, mutual funds can be traded for $9.95 with no 90 day holding period; 3. margin rates are low, 3% if you borrow over $50,000; 4. customer service has almost always been very good. The few times it wasn’t just required another phone call. 5. I seem to make more money with them.
Are they perfect? No, but they are as good as Scottrade which I have an account with also and yet they cost less.

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Neal Frankle March 3, 2013 at 11:27 AM

Bill,

I do not have an account with OptionsHouse so I have no first-hand experience. I have read hundreds of reviews from users and never came across anyone with the experience you had. I am of course sorry you feel this way.

My experience tells me there are always two sides of every story and I have no idea as to the back story here. I do know that OptionsHouse is very well regarded and gets rave reviews from most of the users. I wonder why you continue using them if the service is so poor?

Reply

Bill T February 13, 2013 at 5:32 PM

I have been a customer here for a couple of years. I consider myself an active trader and make 20 trades per week. Some of the brokers here are not properly trained or educated with margin trading, trading rules, order execution and options in general. They have EXCESSIVE hold times when you try to call in and talk to someone.

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