Founded in 1946, with 38,000 employees and $1.5 trillion in assets under management, Fidelity are without a doubt the oldest and biggest brokerage in the online options trading market. The company’s headquarters, based in Boston, Massachusetts, USA, provide a withdrawn yet not isolated location from which to do business. Naturally with the size of Fidelity they are able to attract and retain employees of the highest calibre, who drive the business forward and ultimately provide a better experience for you, the trader.
When you take into account the sheer size of Fidelity it should come as no surprise that they are able to offer all of their clients 24/7 support via telephone, email, live chat and “snail mail” – in addition to offices (which they call “Investor Centers”) that are open to the public all over the country. Our emails were answered within the hour, live chat requests were accepted within a matter of seconds and the operator on the other end of the phone line was polite, knowledgeable and did not try to sell us anything – which actually shocked the entire office. All in all, not too bad for a brokerage with over 17 million accounts.
The Fidelity trading platform is not the most aesthetically pleasing station we have come across but it most certainly gets the job done. As with pretty much every brokerage these days, all the different kinds of trades are catered for, from basic options and stock trades all the way up to strangle and iron butterflies. However the problems don’t lie in what is not but rather what they have decided to keep from new traders.
To get access to OptionTrader Pro you have to consistently trade 20 options contract per month. This means that new accounts (and more importantly new traders) would potentially be operating blind or at the very least partially sighted. When you consider that a lot of OptionTrader’s features are available on other brokers platforms for free it really does leave you wondering if Fidelity are trying to send out the message that they would rather not have you on their books, so they can focus on the bigger fish, so to speak.
Fees and Commissions
This is where Fidelity, for us at least, confirm that they are not interested in dealing with the smaller self directed trader. Their options trades are available on a flat-fee rate of $7.95 plus $0.75 per contract, or $7.95 per equity trade which is a little over the industry standard. So low volume traders will be paying slightly more than the average but getting fewer features and tools to make their trades with, which just does not add up. Additionally, high volume traders can expect to pay almost four times what they could be paying elsewhere as Fidelity’s flat rate fees drives the price of 100 contracts up to $82.95, while you can get 100 contracts at OptionsHouse for $23.50 or TradeKing for $23.95
Broker-assisted orders are priced up at $32.95, which is about a third higher than the industry average but is also available for free at either of the other two brokers above. In Fact, just about the only place they do truly remain competitive is their exercise and assignment fee, which comes in at a very respectable $7.95.
While Fidelity is most certainly a well established and respected broker who will provide customer service like no other in the industry, their pricing and platform limitations for smaller traders seems to suggest they are only interested in handling medium to large accounts. If you are a high volume trader and happen to have a $100,000+ fund then Fidelity may well be the right broker for you, however small traders should look elsewhere.