Is OptionsHouse a Scam? An Review

Is OptionsHouse a Scam? A 2011 Review

OptionsHouse, doing business as OptionsHouse LLC since 2005, is a market maker owned by PEAK6 Investments. PEAK6 has been in business since 1997 in both the stock options and derivatives market.

The big draw to OptionsHouse is based on their promotions. At one time, OptionsHouse offered 100 free trades and $2.95 trades after those first 100 expired. Unfortunately for traders, the $2.95 price has inflated slightly to $3.95 for stock trades. $3.95 per trade is still a great deal, considering that most brokers are changing in the range of $7 to $12, with some high profile brokers charging closer to $30 per. OptionsHouse is also well-known in the options trading market, having won the “Best for Options Traders” award from Barron’s for three years in a row.

To open an account at OptionsHouse, you’ll need to deposit a minimum of $1,000 for a cash account or $2,000 for a margin account.Is OptionsHouse a Scam? A 2011 Review

OptionsHouse Fees

Even though the $2.95 OptionsHouse fees per trade deal ended in January of 2011, you can still sign up for 100 free trades. Getting 100 free trades on OptionsHouse’ new trading platform is a great deal. OptionsHouse released their new platform in March of this year, and it more than justifies the change in OptionsHouse fees. Remember that the $3.95 per trade fee is only good for stock trades. If you participate in options trading, spreads, or other financial trades you’ll have to pay a different fee.

As of this writing, the fee structure for trades other than stocks is as follows.

Fee plans for options trading come in two forms:

  • Up to five contracts for $5 with each additional contract costing just $1 OR
  • $8.50 flat fee plus a charge of 0.15/contract

Fee plans for spreads include two plans as well:

  • Up to 10 contracts for $10 with a $1 charge for each additional contract OR
  • $12.50 flat fee plus a charge of 0.15/contract

Mutual fund trades are $9.95 apiece.

OptionsHouse Trading Platform

The focus on trading at OptionsHouse is options trading, naturally. OptionsHouse offers free online seminars (called “webinars”) that take advantage of PEAK6’s experience in options trading.

OptionsHouse’ new platform offers real time quotes, a risk calculator for various trading situations, industry-standard charting and graphing tools, and a handful of useful watch lists you can tailor to your needs.

I find the Maxit tax-management tool particularly useful. Too many times I’ve made a foolhardy trade through another broker and found myself facing pretty serious tax consequences. With Maxit, I can look at those consequences before I make a hasty trade.

There are other features as part of the OptionsHouse trading platform that are pretty much available at any trading platform–conditional orders, streaming-options chains, and standard portfolio performance reports. You basically get everything you would with a more expensive broker site for much less money.

OptionsHouse also offers their clients an iPhone app for trading on the go, as well as options trading education and classes, the option to get one-on-one coaching at just $150 a month, and the best promotions package of any brokerage online as of this writing.

Is OptionsHouse a Scam?

Because of a large number of OptionsHouse complaints found all over the Internet and the low price per trade, some people think OptionsHouse is a scam.

Most of the OptionsHouse complaints online follow a pattern: “poor execution, clunky platform sceens, mishandling of funds, extremely limited customer service, not much extended hour trading” and the like. There is very little about any actual scams or criminal activity. Complaints about OptionsHouse seem to be from people who expected a service like ScottTrade or TD at a deeply discounted price. The fact is, you’re never going to get the kind of service and tools you’d get at those sites for just $3.95 per trade.

The key to avoiding these common OptionsHouse complaints is to do your research before you join the site. For example–most stocks and trading options valued under $1 are not compatible with OptionsHouse. There are other restrictions as well, like the fact that OptionsHouse’ extended hours trading is extremely limited.

Since OptionsHouse offers “virtual trading,” there’s no reason not to test the service out before you decide to join and start trading. If you play around with the virtual trading service and find you don’t like the interface or the speed at which the trades happen, don’t join the site.

OptionsHouse Promotion Code

There are currently three OptionsHouse promotion code deals available online. Enter these promo codes when you setup your account to take advantage of the deals.

  1. ACAT100REFUND–Use this code and have your transfer fees reimbursed, up to $125.
  2. DELL24–If you deposit $5,000 or more into your OptionsHouse account, you get a free Dell Full HD 24″ Monitor. There are additional monitor giveaways when you deposit larger amounts. Check for the latest Dell monitor giveaway codes.
  3. WIRE25REFUND–You can have your wire transfer fees refunded if you use this code when you make your initial deposit.

Using an OptionsHouse promotion code is a quick way to save a little cash or get a free HD monitor. Check for new promo codes regularly, as OptionsHouse tends to offers lot of different promotions.

OptionsHouse Pros and Cons

The best things about OptionsHouse are the access to PEAK6 market tools and the fact that their commissions are the absolute lowest of any trading site. The worst aspects of OptionsHouse are the lack of futures and international trading, the limited mutual fund investment opportunities, the lack of automated trading, and the difficulty OptionsHouse’ trading platform has with extended hours trading.

OptionsHouse has been dealing with complaints about their service and their financial policies since the site opened, mostly because people expect a top-notch trading service even when they pay OptionsHouse’ rock-bottom prices.

Respect from Barron’s annual list, placing them 4th overall among online trading sites in 2011, means more traffic and respect for OptionsHouse and PEAK6. For options traders, who do battle with spreads and fees on a daily basis, a service like OptionsHouse that offers such low fees for options trading is the best way to lower your trading costs without giving up a quality trading service.