I picked this question (and copied Email) up off an Email list I follow. I figure I'd post it here to see if anyone has any comments. Question from list: I know that many here have recommended Interactive Brokers for trading stocks and futures. I received this email, this morning, recommending two other brokerages for options. I would be interested in hearing how their platforms compare with Interactive Brokers', in that regard. I know from personal experience that Ameritrade/Datek offers nothing comparable. Thanks. OptionsXpress and thinkorswim are new names to me, so I'd love to hear your comments... -Joe ----- Original Message ----- From: Terrys Tips Sent: Sunday, June 29, 2003 12:30 AM Subject: What is the Best On-Line Discount Broker for Options? Dear Options Student: What is the best discount broker for option trading? That is the question I have been asking myself for the past several weeks while I scanned the Internet and kicked the tires of a dozen or so brokersâ websites. And the answer is,â¦â¦â¦â¦, actually, there are two winners, and they are both great choices. They share similar features â some of the best commission rates around, excellent option-friendly websites, option spreads allowed in an IRA, no minimum balance to open an option account (margin accounts require a minimum $2,000), and excellent testimonials from Terryâs Tips subscribers. Both brokers offer wonderful features for anyone who trades options. With a single click, you can see your net delta position for every stock you own, for example. Or you can instantly see a chart which shows the value of all your option positions for each stock at higher, lower, or the same prices for the stock. Let me know if you get set up with either one of these brokers (after Sunday, June 29 2003), and I will give you two free months of my Ongoing QQQ Trading Program free for being so smart. First, thereâs OptionsXpress. They are probably the fastest-growing broker in the country. According to Barronâs, they gained over 22,000 accounts in 2002, an increase of 424% over the previous year. Barronâs rates them with 4 stars, one of the âBest Online Brokersâ. OptionsXpress has the some of the lowest option commission rates of any firm I could find â $1.50 per contract with a $14.95 minimum per trade. Stock trades cost a minimum of $14.95 as well, (for up to 1001 shares). You can apply on-line at http://www.optionsxpress.com/new account.asp. Second, there is another Chicago brokerage firm with the unlikely name thinkorswim. This company caters to the more sophisticated option investor, and has slightly higher option commission rates than OptionsXpress - $2.95 per contract, or $10 per order plus $1.50, whichever is less. If your order is for 4 contracts or less, thinkorswim is actually cheaper. For 5 or more contracts, thinkorswimâs commissions are $10 higher per order. Stock orders (up to 600 shares) cost less at thinkorswim ($.025 per share, $5 minimum), and a little more above 600 shares ($.015 per share plus $10). There are two reasons why thinkorswim might be a better choice. They have an intelligent order routing system that automatically sends your order to the market with the best bid or offer price (7 ECNS, 5 Option Exchanges). If you save $.05 on an option order of 10 contracts because you were sent to a better exchange, you would save $50, or five times as much as the higher commission cost. The second reason you might consider thinkorswim is that they have a superior software platform. One particularly neat software package allows you to enter several option positions for a stock, and see a chart which shows you the value of that set of positions at any time in the future, and at a variety of prices for the stock. You can apply on-line at https://www.thinkorswim.com. I have opened accounts with both firms, and will place identical orders in both OptionsXpress and thinkorswim accounts to see if I get better executions at one broker compared to the other (and let you know, of course). It is a major psychological move for me to leave Brown & Co. after more than 20 years of having an account with them. The company founder, George Brown, was a personal friend. I traded with him before discount brokers were even invented. But things change, option trading is a different animal than stock trading, and newer and better alternatives have come along. Let me know if you get set up with either OptionsXpress or thinkorswim (after Sunday, June 29 2003), and I will give you two free months of my Ongoing QQQ Trading Program free for being so smart. Happy trading. Terry Options involve risk, and are not for everyone.