E Trade Options Commissions - How To Buy And Sell Stock Options Online

Feb. 14, 2011 - PRLog -- E Trade Options Commissions

A revolution has occurred over the last 10 years or so in the brokerage industry. Commissions have fallen dramatically and online trading has made buying and selling securities, especially stock options, faster and easier.

When I was about 10 or 12 years old, I asked a full service broker for a commission schedule. I had already been hit with $100 to $200 commission charges on "market" orders, and I thought it made sense to tailor the number of shares I was buying to the optimal commission threshold. But you would have thought I asked for the guy's Social Security Number and credit card number based on the look he gave me. Then his response was something like, "There's just too many factors affecting the commission... you should just place your order and I'll try to get you a good rate.".... What a crock!! Even at age 10, I knew enough to never buy through that guy again. By the time I graduated from college, I sold everything I had brought through that brokerage firm and never went back.

Today, the stock broker's world has turned upside down. You can trade securities yourself online for as little as $12, $7, $5, and even for free (up to a certain number of trades per month or per year) based on the brokerage firm you pick. Of course, when you trade online, there's no one second guessing you (yea!!), and you can make mistakes (be careful). In this article, I'm going to discuss the nuances of trading stock options online.

When you buy and sell stocks online, everything's pretty simple; just specify whether you want to buy or sell, the ticker symbol for the stock, whether it is a "market" order (i.e., buy at the current "ask" rice or sell at the current "bid" price), and whether the order is good today only or until you cancel it. Get Internet #1 - E Trade Options Commissions @ http://tradingcure01.webs.com and be Successful forever!

Stock option orders, however, require a little more information. Basically, you have to specify: the stock, call or put, strike price, expiration month, and "market" order or "limit" order and premium you want. If you are using a combination of options, it gets a little more complex. I'll discuss each of these items below along with some suggested money saving guidelines.

Let's start with opening an online trading account...

This part is pretty simple. You first select an online brokerage firm. You can look for articles that assess the different brokerage firms based on commissions, quality of customer service, speed of filling orders, quality of user interface, etc. Basically, I recommend you first look for "deep discount" brokers with very low commissions (or even free trades per month or year). You can also go with "discount" brokers if you think you might want more help in placing orders, but you will pay more for every transaction and I doubt you will need "help" very long.

Three deep discount brokers I have worked with include Wells Fargo, ETrade, and Zecco Trading. Wells Fargo gives up to 100 free stock trades per year, but their online software is incapable of making several important, though slightly complex option trades. For example, you can't sell naked puts or place spread orders online. However, customer service is pretty good.

ETrade has good customer service and loads of powerful research features, but they cost a little more and have no free trades (to my knowledge). If you are going to get into serious stock options trading, Zecco Trading is the best I have found in terms of "ease of placing complex orders" and getting orders filled. Basic option purchases, selling naked, credit spreads and debit spreads, collars, straddles, and strangles are all easy at Zecco. They even have butterfly and iron condors available although I haven't used them so far. Plus, you get some number of free trades each month and option trades are only $4.50 plus a few pennies per contract. Zecco customer service is okay.

Once you have selected an online broker, complete an application to open an account. If you are going to trade options, you will also have to complete a Margin Account application and an Options Account application. If you want unlimited options trading privileges, you will need to mark your investment goals to include "speculation", and you will need to claim you have options trading experience. Some options privileges (e.g., selling naked puts) will require large balances too.

Once your account is opened and funded, you can begin trading. The following discussion outlines how to place different types of stock option orders online. Get Internet #1 - E Trade Options Commissions @ http://tradingcure01.webs.com and be Successful forever!

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