Online Broker Review

Updated Monday, May 30, 2011

Options Trading Grade: C

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Overview:

Merrill Edge offers a mostly satisfactory options trading platform. The option chain and detailed quote pages are not perfect but get the job done. Opening new positions works well but closing out existing positions could be a bit more convenient. Amending and canceling open orders both function as one would expect. Trade confirmations include the date but not the hour or minute of execution. There is a limited selection of order types available so those utilizing advanced orders will probably have to look elsewhere. Those that only want a basic options trading platform should be well served with Merrill Edge.

Order Types:

Basic (one option leg) - Buy or sell a single put or call
Spread (two option legs) - An order to simultaneously purchase and sell options at different strike prices, where both have the same underlying, right (call or put) and expiration date
Straddle / Combo (two option legs) - Buy / sell a put and call with matching strikes and expiration

Details:

To trade options at Merrill Edge, log in and select Trade and then Options from the top menu. We were not sure which contract we wanted to trade so we first typed in the symbol for Intel (INTC) and then clicked on the Option Chain Lookup link. The options chain menu that appears is fairly small, which hinders the ability to compare a large list of contracts (click on images for larger views):

Hovering over the contract reveals a small menu with a contract price chart and a link to a detailed quote page. The detailed quote pages feature a larger chart and the same basic pricing information. We would like to see the Greeks listed here but the price charts are nice to have:

From the detailed quote page we clicked on the trade link which brought us back to the trade ticket with the contract now populated. We selected to buy 2 July $21.00 Intel (INTC) contracts with a limit price of $1.60 and a duration of Good Until Canceled. Good until canceled orders are valid for 30 days until they either execute or are purged. Note that a warning box appears noting that the limit price specified is market ask price. This is just a warning message though and so we ignored it and clicked on the Preview Order button:

This loaded the options order preview menu featuring the order summary, the estimated commission and estimated order total. Everything looked fine so we clicked on the Submit Order button:

The next screen notified us that our order was submitted and supplied us with an order reference number and other useful information. We clicked on the View Order Status button to check if the trade executed. Note that this menu can also be accessed by selecting Trade and then Order Status from the top menu. From this menu open orders can be amended or canceled, with both actions working as expected.

Once our order executed our new found position was populated in the Account Holdings menu. At a later date we decided to close out our position so we hovered over the contract name and then selected Trade from the window that appeared:

This retrieved the option order ticket with the contract populated. We then selected Sell to Close, typed in the number of contracts and selected to submit a limit order with a corresponding price. It would be a lot more convenient if this information was populated automatically as well.

Merrill Edge Options Trading