Online Broker Review

Updated Friday, April 15, 2011

Options Trading Grade: C

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Note: This is our review of options trading in the standard web based E*TRADE platform. For our review of options trading in Power E*TRADE Pro click here.

Overview:

Trading options at E*TRADE is an average experience. The options contract information page and charts are well done, but they are not easily accessible from the trading menus. At the least, the trade ticket could use a symbol look up feature. Entering new trades from trade ticket is satisfactory but closing out existing positions from the portfolio menu could use some improvement. Canceling open positions is easy but there is no option to modify orders, which is a minor inconvenience. Trade confirmations include transaction time down to the second. Option order types are limited, so those utilizing complex option trading strategies need not apply.

Option Order Types:

Basic (one option leg) - Buy or sell a single put or call
Complex Spreads (two option legs) - Buy/sell any combination of puts/calls
Comples Buy/Writes (stock + one option leg) - Buy/sell stock and buy/sell puts/calls

Details:

To trade options at E*TRADE, go to the Trading & Portfolios tab and then select the options tab. This displays the basic options trade ticket. A contract look up link would be very useful in this menu. In the absence of one we did a symbol look up for XOM (Exxon Mobil) selected the options chain tab, and then selected to display December puts (click on images for larger views):

From the options chain listing, users can load particular contracts into the trade ticket menu by clicking on the bid price to buy or ask price to sell. We clicked on one of the contract symbols to bring up an information page and pricing chart:

From this page, we clicked on the buy button to bring up the trade ticket. We then selected to buy 1 contract at a limit price of $4.00 with a good for 60 days designation and clicked on the preview order button:

This brought up the preview order menu. We selected to place the order:

Our trade was submitted and a confirmation order screen appeared. We clicked on the view order status button:

The order status screen showed our newly created order with a status of open. From this menu, users can cancel or modify trades. Both actions work well and instantly update the trade status on the order status menu. We decided to let my trade go through and it executed soon thereafter.

Once our trade executed it could be viewed from the portfolios menu. We decided to close out our position so we clicked on the trade link next to the contract name:

This brought up the trade ticket with the symbol auto populated. It would be a lot more convenient if the order type, number of contracts, and limit price were also pre-populated.

E*TRADE Options Trading