Online Broker Review

Updated Thursday, February 24, 2011

Scottrader Options Trading Grade: D

CLICK HERE to open an account at Scottrade.com

Note: This is our review for the Scottrade Scottrader options trading platform. For our review of the standard web based Scottrade options trading platform click here.

Overview:

Trading options with Scottrader is just as underwhelming as the standard Scottrade web based options trading platform. Executing basic one legged order types could be made more convenient if the quick stock trade menu worked for options trading as well. Conditional and one cancels other order types are great but what is really missing are the basic covered and multi leg order types. Options contract price charts would be nice to have. Modifying and canceling open orders works as expected. Scottrader seems to have been designed primarily with stock trading in mind, thus making it less than ideal to handle options trading.

Order Types:

Buy Calls (one option leg) - Buy one or more call option contracts
Buy Puts (one option leg) - Buy one or more put option contracts
Conditional (one option leg) - Conditional orders can be customized to trigger on a variety of situations not specified in other trade types, such as volume or time constraints. Conditional orders offer a huge variety of potential order types. Visit Scottrade for more information.
One Cancels Other/All (two separate option orders) - Enter two orders, and if one of the orders executes, cancel the order. Conditions can be set for execution of each of the two orders.

Scottrade also allows clients to sell covered calls but there is no specific order type to do this. Users simply purchase the underlying shares and then sell the corresponding calls via separate transactions.

Details:

Scottrader is real time quotes and trading platform available to all Scottrade customers free of charge. To launch Scottrader, log in via the standard web based trading platform and locate the Scottrader link found in the far left menu. Clicking the link will download a java file that will launch the Scottrader platform. Note that Java 6 update 14 or higher is required to use Scottrader.

Before trading any options, the first thing that new Scottrader users want to do is create a list of desired options contracts. These lists are simply groups of options contracts that the user is interested in keeping track of in real time. Multiple lists can be created and given unique names.

Next, users will want to create a layout. Layouts are user customizable reports that display up to 40 different columns updated in real time. Column choices include bid / ask / last prices, $ / % change, open / high / low / close prices, volume, 52 week high / low prices, price / earnings ratio (P/E) and yield. Once columns are selected they can easily be re-ordered by clicking and dragging column headers or re-sized by shrinking or expanding column headers. Up to three layouts can be created and toggled via layout tabs found at the bottom of the application.

Here is a look at our Scottrader window with a customized layout and a list of Exxon Mobil (XOM) based options contracts (click on images for larger views):

Once we created our layout and list we were ready to trade. The quick trade menu, as discussed in our Scottrader stock trading review, does not work for options trading and so we are left with being able to use only the advanced trading menu. To trade options, click on the Buy or Sell link found in the Trading column, which opens a new window with an order entry menu. One additional feature found in this menu is the Advanced tab, which allows for conditional orders. We decided to purchase 1 XOM $90 March Put with a limit price of $4.60 and a time in force of good until canceled. Once everything was set we clicked on the Place Order button:

A dialog box appeared which asked us to confirm our order. We clicked OK which brought us back to the order entry menu and provided us with an order submission confirmation with reference number. Note that this dialog box cannot be disabled for either the advanced order entry menu or the quick trade menu, which may be a minor annoyance to ultra high frequency traders.

To check the status of our order we clicked on the Open Orders button found at the top of the Scottrader menu. This opened a new window where we could modify or cancel our order, with both actions working properly. We decided to let our order go through so it executed shortly thereafter. We then clicked on the My Positions button at the top of the Scottrader menu to view our newly acquired holding. After a small gain we decided to close out our position so we clicked on the Sell link:

This opened a new window with the options trading menu set to sell our specified symbol. It would be more convenient if the quantity also auto-populated to the number of shares that we owned.