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Etrade Options Trading Review and Cost

Etrade options trading review 2019: options pricing, fees, options commissions, platform, trader level 2 quotes.

Etrade Options Trading Introduction

E*Trade clients who invest in the broker's standard selection of stocks, ETF's, and mutual funds should also consider the firm's option trading capacity. With option research and educational tools along with a host of trading platforms, the broker is worth checking out.

Option Research

Investors at E*Trade have access to over 40 option lessons. These are in either video or web seminar format. The lessons have three different levels: basic, intermediate, and advanced. The resources are courtesy of several different sources, including E*Trade, the Chicago Board of Equities, the Options Industry Council, and Pro Market Advisors. The lessons cover several different topics, such as mini options, covered calls, diagonal spreads, and selling puts. Some of the videos last more than an hour and go into great detail.

Etrade Options Trading Review

Beyond instructional videos on options, E*Trade also offers some helpful tools to find possible options to buy or sell. One such tool is a strategy optimizer. Users select a market outlook for the underlying stock, such as bullish or neutral, choose a target price and expected volatility, a time frame, and an investment amount. The tool then recommends an option strategy based on the inputs. Included data in the results are maximum loss and gain, an estimated profit or loss, and minimum account capital to enter the position. There is also a description of the option strategy, such as short put, which describes its uses and risks.

Etrade Options Trading Review

There is also a probability calculator, which determines the likelihood that the underlying stock will move below or above certain prices within a given time frame, based on a particular level of volatility. Users enter these estimated data, then the calculator determines the odds of the stock going outside of the price range.

E*Trade also has a useful options screener that scans the market's options based on criteria such as calls and puts with the highest time value, high call or put volume, high open interest, and indicative value range. A trade button next to each result makes order entry quick and easy.

Using a Stock's Option Chain to Place an Order

Clicking on the 'Options' tab on a stock's profile page produces the security's option chain. Hovering over the 'Details' link produces more information about a particular contract, such as the day's high and low prices. Different expiration dates can be selected and several option strategies can be utilized. Clicking on a bid or ask price generates an option trade ticket, where information can be verified and then submitted to the exchange.

Etrade Options Trading

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Trading Options on the Mobile App and Desktop Platform

E*Trade's mobile app and advanced desktop platform both have the ability to buy and sell options. The desktop system, E*Trade Pro, has an options analyzer along with streaming Greeks to gauge the riskiness of particular options. Unfortunately, in order to use the platform, accounts must place 30 stock or option trades or more every quarter, or have an account balance above a quarter of a million dollars.

Trading Options on Etrade

Fortunately, the mobile app has no such requirements. Near the bottom of a stock's profile page is an icon for the security's option chain. Tapping on it produces a shaded chart of bid and ask prices that shows which contracts are in the money, and which ones are out of the money. A graph can also be displayed that shows a contract's price history. Expiration dates can be quickly changed. Tapping on a bid or ask price generates a trade ticket for buy to open, buy to close, sell to open, and sell to close orders. Unfortunately, option strategies besides standard calls and puts are not available on the mobile app.

Trading Options on Etrade

Etrade Options Commissions

E*Trade customers pay $0 to buy and sell stocks and ETF's. Options cost an additional $0.65, per contract. Multi-leg orders can be placed at the broker with just one base charge, up to a maximum of four legs. Active Exercises and assignments are a rather uncomfortable $19.99.

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Etrade Options Trading Comparison

Ally Invest clients are charged $3.95 plus $0.50 per option contract. This commission schedule is obviously better than E*Trade's, although E*Trade has better option research and educational videos and tools.

Fidelity customers pay only the broker's standard commission of $4.95 for option exercises and assignments. This looks much more reasonable than E*Trade's $19.99 charge, which is twice E*Trade's standard commission. Fidelity also has more sophisticated research tools for options, along with a larger library of educational videos.

Etrade Options Trading Summary

E*Trade has good resources for investors interested in buying and selling derivatives. But with the broker's high commissions, option traders can find better values elsewhere (read Low fees options brokers article).

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Etrade Options Trading reviewed by Rating: 3.5