If you're anything like me you already have a consistent trading strategy figured out. You’re just placing the same trades repeatedly, trying to rack up as many occurrences throughout the year as you can. But the more you trade, the more commissions impact your performance—which is why eOption.com is one of my favorite brokers for trading credit spreads.
That’s because eOption.com is all about price—no frills, just trading at a very low cost. The best way to illustrate the massive savings is to compare eOption.com to other brokers (and if you haven’t already, check out Broker Finder, the super cool tool I built for comparing brokers). Let’s say I make 100 ten lot vertical credit spread trades a year. Because I am opening and closing these trades, I rack up 200 opportunities to pay commissions. Below is a breakdown of the yearly commissions I would pay to each potential broker of these trades.
The cost difference between eOption.com and the other brokers is no joke—the closest competitor comes in $1,000 higher! What’s more, I haven’t had any execution issues and I find the no-frills approach of eOption.com to be easier and faster to navigate than that of other brokers. Plus, I have had very good customer service experiences.
So What’s the Catch?
In the case of eOption.com the catch is tools. Or more precisely, the lack thereof: eOption.com has almost no useful tools for discovering, quoting, and monitoring trades. And though eOption.com has a mobile app it isn’t very good (it appears to be software the company purchased instead of building in house). Lastly, eOption.com does not have an API for public use (I like to write custom software to use with brokers, but not everyone rolls that way).
About these shortcomings I say, “Who cares?” At one time the difference between brokers was the tools they provide, but today most tools are available free on sites such as Yahoo! Finance. Meaning you can use the tools from another provider and execute your trades with eOption.com. I love the tools thinkorswim (Ameritrade) has. I also think that TradeKing has a great public API, and E*Trade has the best mobile app. I keep buy-and-hold or retirement accounts with all of these brokers. In addition, I often use Ameritrade to test new trading strategies in small quantities, and I want to support what Dough is building so I place trades with them as much as possible. But when it comes to the bulk of my yearly trading eOption.com gets my business. The point is that you can—no, should—have multiple broker accounts to leverage the best from each.
As the commissions graph above demonstrates, the difference in commission expenses can add some extra alpha to your yearly returns. You are in the business of making money when you trade, right? Lowering your commissions is a risk-free trade.
