Online Broker Review

Updated Saturday, March 21, 2011

Xtend Options Trading Grade: B

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Note: This is our review of the optionsXpress Xtend options trading platform. For our review of the standard web based optionsXpress options trading platform click here.

Overview:

The optionsXpress Xtend platform is a well designed, robust application. That is why it is surprising that its options trading functionality is a bit of a letdown. Opening new positions from option chains could be handled better. The trade ticket user interface is poorly laid out. Modifying and canceling open orders generally works well, with one minor exception detailed below. Closing out existing positions could also be handled slightly better. Order types are extensive but we would expect a better implementation of advanced orders from a powerful desktop application. Xtend is still a better options trading platform than most web based solutions but it falls far short of its potential.

Order Types:

Buy Call / Put (one option leg) - Buy a single call / put
Covered Call (stock + one option leg) - Buy stock and sell call option
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
Combo (two option legs) - Either (1) buy a put option and sell a call option or (2) sell a call and buy a put
Straddle (two option legs) - Buy/sell a put and call with matching strikes and expiration
Strangle (two option legs) - Buy/sell a put and call with matching strikes and varying expiration
Collar (stock + two option legs) - Either (1) Buy a put option, sell a call option and short the corresponding stock or (2) sell a call, buy a put and buy the corresponding stock
Butterfly (three option legs) - Buy an option with one strike price, buy an option with a second strike price, and sell two options with a third strike price that is midway between the prices of the first two options
Condor (four option legs) - Buy two options and sell two options. All options are either puts or calls
One Cancels Other aka OCO (two option legs) - When one order is filled the other order is simultaneously cancelled (when both orders are linked with OCO). Used primarily as an exit strategy, customers use the OCO feature to assist in either capturing gains or avoiding losses.
One Triggers Other aka OTO (two option legs) - When one order is filled the other order is simultaneously triggered (when both orders are linked with OTO)
Contingent (one option leg) - Customizable order type that can trigger based on specific price, time or volume conditions. These are often referred to as conditional trades.

Details:

Xtend is a downloadable trading platform available to all optionsXpress customers free of charge. To try Xtend, go to the optionsXpress website to download and install the application. Xtend can then be launched from your computer desktop without having to log in to the web interface. Xtend is compatible with Windows, Mac OS X and Linux and requires the installation of Adobe AIR.

The Xtend Interface
Xtend has a fully customizable grid layout structure which means that windows can be added, arranged and sized as the user sees fit. Windows available include balances, positions, quotes, watch lists, the trade ticket, options chains and more. Layout choices include 3 columns, 2 columns and free form. There are pre-built themes that are geared towards stock trading, options trading, futures trading, active trading and more. Fonts and interface colors can also be customized. Here is a look at the Xtend interface with two columns showing an option chain, the trade ticket and a detailed quote (click on images for larger views):

Option Chains
Option Chains are lists of put and call prices, broken down by strike and expiration date. Columns shown include the symbol, bid, ask and open interest. Columns can be resized and re arranged by clicking and dragging the column headings. Clicking on a symbol will bring up a detailed quote window while clicking on the bid or ask prices will load a separate trade window. The trade window is identical to the trade ticket window so we are not sure why this action does not just load the symbol into the trade ticket for trading.

Trade Ticket
The trade ticket window is the main order submission method used in Xtend. We selected to buy 2 contracts of JPM (J.P. Morgan) April $45 Puts at a limit price of $1.65 and a duration of GTC (good until canceled). OptionsXpress does not specify how long GTC orders are maintained in their system. We think the trade ticket interface is a bit clunky, with odd placements for the various order entry boxes and a mixture of font sizes which makes everything hard to digest. Once everything was set we clicked on the Place Order button:

This brought up a confirmation dialog box. We clicked on the Yes button to submit our order:

This brought up a second dialog box that provided us with an order confirmation number. Note that both dialog boxes can be suppressed by accessing the trade ticket settings menu. This is a welcome feature for high frequency traders.

Once our order was submitted we went to check the status by loading the order status window. From here, orders can be modified or canceled. One issue we found is that modifying orders by changing the order type (for example: modifying a market order into a limit order) does not work properly. Canceling orders has no such issue.

Once our trade executed it populated in the positions window. From here, positions can be closed out by right clicking on the symbol and selecting one of the trading links. Like the functionality found with option chains, this loads a separate trading menu. We would prefer if this simply populated the trade ticket window:

To trade advanced orders, such as straddles and condors, change the order type in the trade ticket to the desired type. This will then display the multiple legs in the trade ticket window.

optionsXpress Options Trading