Looking for an online brokerage that gives you plenty of investing ability and low commissions? This comparison between OptionsXpress and Scottrade takes a look at two of the most important considerations for choosing an online brokerage: fees and tools, as well as a few other considerations. Here’s a look at how these two brokerage services stack up.
- Review of: OptionsXpress vs. Scottrade
- Reviewed by: Janet Berry-Johnson, CPA (Forbes.com Contributor)
- Published on: December 9th, 2016
Last modified: December 9th, 2016
While many online brokerages offer competitive pricing for stock trades, fees for options trading can make a serious dent in your earnings. OptionsXpress express is a clear leader for low options investing fees. They provide stock trading at $8.95 per trade and options trading at $1.25 per contract, with a $12.95 minimum. There are no account maintenance fees or inactivity fees. Mutual fund trading costs $9.95 plus the load fee per trade.
Scottrade has been around for more than 35 years, long before online investing was a possibility. They offer stock trades at a very competitive $7 per trade. Options trading costs $7 plus $1.25 per contract. Mutual fund trading runs $17 per trade for no-load funds. Load funds are free to buy but will cost $17 to sell or exchange.
Like OptionsXpress, Scottrade does not charge an account maintenance fee or inactivity fees, however, unlike OptionsXpress, they do have a minimum deposit to open an account of $2,500. However, there is no minimum to open an IRA account, making Scottrade a good option for beginning investors. Both brokerages require a $2,000 minimum to maintain a margin account.
If you want to make broker-assisted trades or phone trades, Scottrade charges $32 per trade. OptionsXpress does not charge for broker assisted trades, which gives account holders who like to take advantage of this service a significant benefit over most other online brokerages.
Investment products and account types
Charles Schwab purchased OptionsXpress in 2011 to get in on the online brokerage game. OptionsXpress is a pioneer in the online brokerage game, having opened their website in 2000. As the name implies, they specialize in options trading, but they also offer trading of stocks (including penny stocks), bonds, mutual funds, futures and forex. Because of its link to Charles Schwab, OptionsXpress offers more than 200 commission-free ETFs, including Schwab Market-Cap Index ETFs and Schwab Fundamental Index ETFs.
OptionsXpress offers individual and joint taxable accounts; Traditional, Rollover, Roth, SEP, and Simple IRAs; trust and business accounts; and custodial accounts for minors, including Coverdell educational IRAs.
Scottrade offers the usual trading of stocks (including penny stocks), bonds, and mutual funds in addition to forex. The do not provide any commission-free ETFs or futures trading, which would be a drawback for investors looking to trade in those markets. If ETFs are your preferred investment vehicle, commissions can add up quickly with Scottrade.
Scottrade customers can open Traditional, Rollover, Roth, SEP, and Simple IRAs; individual and joint taxable accounts; trusts and business accounts; and custodial accounts including Coverdells.
Unlike OptionsXpress, Scottrade also offers banking. As long as you have a brokerage account with at least $500 in equity, you can take advantage of free checking and online bill paying. They also pay interest on checking accounts (although just .01%) if you maintain a minimum balance of $100 in your checking account.
Research and tools
OptionsXpress offers research and tools for every level of investor through its on-demand video library. Users can learn everything from the basics of utilizing the platform to investment strategies.
They also offer live seminars with introductions to different investing options, trading strategies, and market outlook at Schwab branch locations throughout the country. There, investors can meet financial professionals and ask questions. But if you can’t get there live, join a free interactive webinar to get professional investment coaching no matter where you are located.
If you want to practice before you start putting real money on the line, OptionsXpress’ Virtual Trading platform allows you to trade with $25,000 of fake cash for forex and other investments. Scottrade does not offer a virtual trading account for practicing in the risky forex market.
Scottrade offers live seminars and interactive webinars, video tutorials, podcasts, investment calculators, and a wide variety of helpful educational tools in their Knowledge Center. Investors can also customize their homepage, allowing them to select the charts, symbols, research, market data, and tools that interest them.
Investors with at least $25,000 in a Scottrade brokerage account and who place at least nine trades per quarter get access to ScottradeElite. This is a fully customizable trading platform where investors can research the market, identify and take action on opportunities, makes trades, and manage accounts from a single interface. You’ll get streaming news, advanced charting capabilities, and greater market research tools to help you discover and manage investments.
Most online brokerages offer mobile apps, allowing investors to trade on the go. In addition to its website, OptionsXpress has apps for iPhone and iPad as well as Android devices. Market news is available in article form on the app, and they have some charting, stock indexes, and a watch list.
Scottrade offers a well-designed website as well as apps for iPhone, iPad, and Android devices. The app offers mobile check deposit, but other advanced features are pretty minimal. Scottrade’s app does not offer live streaming of financial news and provides very little charting.
OptionsXpress customers can take advantage of phone support Monday through Friday from 9 a.m. to 8 p.m. Eastern. They also provide live chat and email support. Investors can also visit more than 300 local Charles Schwab branch locations for support.
Customer support hours are a little broader at Scottrade. They over phone support on weekdays from 6 a.m. to 1 a.m. and on weekends from 9 a.m. to 7 p.m. Eastern. Their phone system automatically routes callers to a local branch during business hours. They also offer email support and live chat. And Scottrade started out in the brick-and-mortar brokerage sphere, they have an extensive network of nearly 500 branch locations where you can find a local representative to assist you. Scottrade prides itself on customer service and consistently receive high marks in that category.
Both OptionsXpress and Scottrade are members of the Securities Investor Protection Corporation (SIPC), which protects against losses caused by the financial failure of their brokerage, but not against losses resulting from decreases in a security’s value. Accounts are SIPC insured for up to $500,000 (including up to $250,000 for cash claims). Scottrade’s banking accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
Both online brokers have also secured excess SIPC coverage for an additional $100,000,000 total, subject to a maximum limit of $24,500,000 per customer, $900,000 of which may be in cash.
Scottrade also developed the Scottrade Online Security Guarantee to protect their customers against unauthorized online transactions in their Scottrade account. They will reverse eligible online fraudulent transactions at no cost to customers.
The Bottom Line
With its extensive interactive website and great educational resources, OptionsXpress is an excellent choice for investors who want a lot of resources and inexpensive options trading. However, the complicated fee schedule may dissuade some investors. But if you want to take advantage of broker-assisted trades, you really can’t go wrong with fee-free broker assistance.
For investors looking for the added convenience of one-stop investing and banking services, Scottrade offers full service brokerage and banking services and competitive fees. They’re also ideal for anyone looking for occasional access to local help. They fall short for investors looking for commission-free ETFs and futures trading, but anyone interested in investing strictly in stocks will be better served cost wise with Scottrade’s $7 flat fee for unlimited shares.
**Please note those looking to open a basic online brokerage account may want to consider TradeKing. Their interface is easy to use, and the fees are among the lowest of any online brokerage. Be sure to check out our TradeKing vs. Ameritrade article for more information.