Since the early 2000s, there has been an explosion of online brokerage firms that give investors greater control over their trades. These firms are locked in an intense competition, and new entrants continue to emerge in the online brokerage marketplace. Here we compare two popular brokerage firms, OptionsXpress and OptionsHouse, based on some key metrics such as pricing, technology, research and technical analysis tools. (For general guidelines on how to choose an online broker, see article: 10 Tips For Choosing An Online Broker .)

OptionsHouse: Stock trades are priced at a flat rate of $4.95 per trade, and options trades are priced at a base rate of $4.95, with single-leg trades being priced at $0.50 per contract. The $4.95 base charge applies to single-leg and multi-leg option strategies (spreads, straddle and combo ), with the exception of covered calls and puts. For trades which are covered calls and puts. charges are calculated for the individual components of the trade as follows: The stock will still trade at $4.95 per trade and the option part will trade as it does in a single-leg trade. Mutual fund fees are $20. OptionsHouse’s low margin rates, which range from the Fed Fund Rate of plus 6.25% (or 6.50%) for less than $25,000 to the Fed Fund Rate of plus 1.75% (or 2.00%) for more than $1 million, are particularly advantageous to short sellers .

OptionsXpress: Stock trades are priced at $14.95 flat per trade for up to 8 trades of up to 1000 shares (or $0.15 per share for trades above 1000 shares), and $9.95 flat per trade for 9 trades of up to 1000 shares (or $0.01 per share for trades above 1000 shares) in a quarter year. Options trades of 1 to 10 contracts for single-leg options (2 to 10 contracts for spreads, straddles and combos) are priced at a standard flat rate of $14.95 or at a reduced “Active Trader Rate” of $12.95. Options trades of more than 10 contracts are priced at a standard rate of $1.50 per contract or an “Active Trader Rate” of $1.25 per contract. ( To learn more about options trading, see: 10 Options Strategies To Know .)

The prices of OptionsXpress’ futures range from $6.99 for 1 to 40 contracts to as low as $2.99 for more than 1000 contracts. Options on futures prices range from $12.99 for 1 to 40 contracts to $5.99 for more than 1000 contracts. Fixed income bonds are priced at $5.00 per bond with a $14.95 minimum price. Mutual funds trade at $9.95 plus load fee (where applicable). Penny options of 1 to 10 contracts trade at a flat rate of $4.95 and $0.50 per contract for more than 10 contracts.

OptionsXpress’ margin rates range from the Fed Fund Rate of plus 8.00% (or 8.25%) for up to $49,999 to the Fed Fund Rate of plus 5.75% (or 6.00%) for more than $1 million. OptionsXpress has reduced its “Active Trader Rates” for active traders who must perform at least 35 option trades or 9 stocks per quarter, but these rates are still higher than those of OptionsHouse. (To learn of certain strategies that bring advantages to active traders, see: Benefits Abound For Active Traders Who Incorporate .)

Both brokers provide traders with the latest technology in the market and allow traders to customize the platforms to their liking and to trade from various devices (including laptops or desktop computers, tablets, and smartphones). OptionsHouse’s LiveAction technology can scour the market to detect, and alert traders of trading opportunities and its StrategySEEK tools can assist traders in formulating trading strategies to exploit potentially profitable opportunities, all the while taking into account investors’ risk objectives, and price and volatility forecasts. OptionsXpress’ Dragon, similar to LiveAction, searches the market for opportunities based on the trader’s preset criteria, and Idea Hub assists traders in the formulation of option strategies.

Research and technical analysis tools

Both OptionsHouse and OptionsXpress provide investors with quality research data (economic and company-specific fundamental analysis) and technical analysis tools to a varying degree. It is conceivable that OptionsXpress can leverage its parent company’s (Charles Schwab) resources to provide investors with greater research assistance. OptionsHouse, on the other hand, relies on OptionMonster for some of its research and peer performance metrics.

Competitive Edge

OptionsHouse, being the low-cost broker with limited investment choices, competes primarily on price. OptionsHouse’s prices are among the lowest in the industry and its margin rates are significantly lower than those of OptionsXpress. Meanwhile, OptionsXpress delivers a very versatile trading platform that gives investors and traders a more complete tool to access more investment choices with its “All-in-One” platform (including equity stocks and ETFs, mutual funds, fixed income bonds, options on futures, and futures on stocks, commodities and currencies).

OptionsHouse is best suited for short-term and frequency traders of stock and options who are sensitive to transaction fees and interest on margins, but aim to take advantage of short-term market opportunities at the lowest cost possible. OptionsXpress, in contrast, takes the portfolio perspective and is best-suited for long-term investors who are interested in taking long-term positions and want exposure to more investment choices, including currencies and futures. (For related reading, see: Investing 101: Portfolios and Diversification .)

The Bottom Line

The bottom line is that these two brokerage firms provide different value packages to different clienteles. For stock- and-options-specific traders, short sellers (who rely on margin trades) and day-traders, whose primary trades focus on options and stocks, OptionsHouse may provide the best value. That’s because OptionsHouse’s transaction fees are among the lowest in the industry, and it also provides award-winning technology in the space that it operates, as well as sound research. Meanwhile, traders who have a long-term perspective, who prefer to have diversified portfolios, and who value a wider range of investment choices (including futures and currencies) and greater access to research will find the most value with OptionsXpress. That is because OptionsXpress provides advanced research and a broad array of investment choices (stocks, bonds, futures, options on stocks, futures and currencies, and currency foreign exchange) that enable investors to construct a more diversified portfolio in a centralized platform.