Fidelity is big. In fact, they are one of the largest mutual fund companies and workplace savings plan account managers in the U.S., managing nearly $2 trillion in assets. They offer a wide range of investment opportunities from stock trading to retirement accounts. However, the question is, what can they offer options traders specifically?
This online options trading service offers average prices for options trades, analysis tools and market news. However, the analysis tools you get will depend on the volume of options you trade per month. Unlike most of their competitors, Fidelity withholds some of their best trading tools for members who execute fewer than 250 contracts per month.
Fidelity charges a flat fee plus a per contract rate for options and flat-fee trades. They charge a competitive rate of $7.95 for equity trades and $7.95 plus $0.75 per contract for options. For casual options traders, who execute less than 50 contracts per month, the pricing is comparable to the competition. However, the best-priced discount brokers offer options trades for much less, even as low as just over $20 for 100 contracts.
Broker-assisted orders are also on the high end at $32.95 plus $0.75 per contract. Fidelity caters to those who maintain higher balances; most brokers require a minimum account equity balance of $2,000 to place orders on margin. Fidelity requires $5,000. In addition, to use the entry-level options analysis software you have to trade 20 contracts per month or 250 to use the complete capacity of the software. Margin rates for those with balances over $500K is 2.825% less than the base rate. Lower balances can be charged as much as 2% over the base rate.
As with all brokers it is prudent to investigate additional fees such as regulatory fees, check fees, wire charges, debit card fees and account transfer fees. Another best practice is to print and save the Fidelity Customer Agreement, which is an exhaustive 40 pages long. Wading through tedious customer agreements with brokers can be frustrating, but since it is a binding document, it is worth it in the long run should a problem occur.
All Fidelity account holders have access to market news, articles, quotes, calculators and stock screeners. In addition, they provide apps for all popular mobile devices, including the iPad, iPhone, Blackberry and Android mobile phones. They provide an extensive list of preset alerts and screeners. You can also configure alerts, watch lists and stock screeners based on your own criteria. They provide numerous educational opportunities, including free seminars hosted at their investment centers.
However, OptionTrader Pro, the Windows-based option analysis tool, is only available to active options traders. This tool can stream data from options exchanges as well as Greeks and analytics. It can direct your options to specific exchanges, run simulated trade strategies and stage orders. OptionTrader is available to those that execute an average of 20 options contracts per month. You have to trade over 250 contracts per month to take advantage of position level analytics, charting, what-if analysis and multi-leg trading. This software is highly functional but not necessarily sleek looking. It looks like an old Excel-based program that has not seen a major facelift in a long time.
Fidelity employs nearly 40,000 people and has the resources to provide 24/7 customer support. You can contact them by email, telephone, instant chat or postal mail. You can also visit one of over 160 investor centers located in cities such as Cincinnati, Dallas, Salt Lake City, Albuquerque or Jacksonville. According to Fidelity, their websites handled an average of over 3 million visits per day in the third quarter of 2011 and they manage nearly 17 million brokerage accounts. They have numerous protocols in place to handle large volumes of customer inquiries and account issues.
Fidelity is a major investment company with years of experience managing mutual fund investments, traditional brokers, retirement accounts and active traders. However, they do not offer the lowest prices for options traders and they do not provide all options analysis tools to all traders like some of our higher ranked services. In addition, their options analysis software appears to need an interface update. Fidelity is more suitable for managing long term investments rather than active options traders.
