The central premise of online securities trading is this: why pay $500 for something you can do yourself, online, for about $5.
That’s the heart and soul of an online brokerage firm, and it goes for online options trading, as well.
If you’re unfamiliar with online trading, it provides everything you get from a human broker in the way of services, only cheaper, faster and most accessibly.
What you see on the screen is what you have
You manually execute and manage your account from your desktop computer, paying about $5 per trade regardless of the dollar amount. Your account is always visible and your trades are instantly integrated into balances, and you can access research and download confirmations, statements and tax documents as you please.
All with 100% safety and reliability. It’s taken over the investment business, rendering the human stockbroker the province of institutions and individuals who either don’t have the time, skills or interest in doing it themselves.
And now, this same self-implemented service is available to online options trading, as well
Just as with a traditional brokerage, you’ll open an account with an online broker, who will need to qualify and approve you for options trading. These brokers are fully qualified and governed, every bit as much as a traditional brokerage service. In fact, the very technology that’s on your desktop is almost identical to that used by your human stockbroker, minus the complimentary coffee.
Once so approved, you will deposit funds into your account – if you’re doing any online banking the experience is nearly identical in terms of safety and the visibility of your money – and then, using real-time access to market data, you can execute buy and sell options trades at your own pace, and with your own hands.
The only significant difference, one which some regard as a downside, is a relationship with a broker whom you trust to give you solid advice. With online options trading you’re on your own to find and select your contracts, execute the trades, and then monitor the market to determine your exit point.
Pennies on the commission dollar
The commissions for these trades hover around $5 each, no matter how large the dollar amount. This is a fraction what a human stockbroker will charge you, and puts the assessment of the value of a second opinion – or that of someone you’ve asked to, in effect, make your buy/sell decisions for you – squarely in your hands.
Which, by the way, is where the bottom line accountability and consequences of these decisions has always resided. That much hasn’t changed with online trading, and never will.
