Putting SogoTrade Through Its Paces

THE BOOM IN OPTIONS TRADING HAS ENCOURAGED many online brokers to launch platforms to accommodate it. These days, it is a rare brokerage that doesn’t allow its customers to buy and sell options.

One of the former holdouts, SogoTrade (http://www.sogotrade.com), just joined the party. We got a look at the product just before it launched publicly, then took another look after its debut on July 21.

The SogoTrade options platform brought to mind several others that I have seen recently, including Options-House (http://www.optionshouse.com) and tradeMonster (http://www.trademonster.com). Dave Whitmore, president of SogoTrade, says the platform was developed in-house, based on industry best practices.

We tested it using the most recent version of Firefox for the PC; the broker recommends Firefox, Safari or Chrome. We found the platform works best in full-screen, since some tools don’t display when there is less real estate available.

Options quotes stream in real time, as do quotes for the underlying stock. When viewing quotes, there is a panel on the right side of the screen that offers one-click access to a Profit/Loss calculator and a probability calculator, which assess the likelihood that the underlying security will reach certain price objectives or risk points.

Hovering your mouse pointer over a sigma symbol on the far left side of a quote (for calls) or far right (for puts) displays the Greeks (risk measures that include implied volatility, delta, and gamma) in a small box that floats above the screen. The intrinsic and time value built into each strike price display when you hover your mouse pointer over the price.

There are several ways to place a trade. From the quote screen, you can click on a box near the strike price to build a spread. Click once to buy, and twice to sell; a third click clears that particular strike from your spread. Next to the buy/sell indicator is a small box where you enter the quantity. Once you have set those parameters, click on the “Trade Selected Options” box and an order ticket is displayed. You can also click on the “Orders” tab and enter the parameters manually. The Orders tab displays a history of orders placed, and whether they were filled, cancelled, or still pending. When you enter an order, the total cost is displayed before you execute it, which I like.

SogoTrade has updated its platform to provide real-time account balance information that is very helpful when one is placing a trade. Buying power and current holdings are all visible. The initial rollout of the options platform allows customers to trade long options and covered call positions only. Multi-leg and short positions will be released later this year.

Problems arise when going deeper in the tool kit, but considering this is a first iteration, we expect to see improvement. One issue is that clicking on an item in the watchlist has no effect on the option quote being displayed. I would like to see an easier way to switch the contract on display than typing in a new symbol.

The security tactics built into the SogoTrade Website are notable. It takes a few extra seconds to get logged in because you enter a PIN using your mouse to click on the numbers displayed on the screen. The position of the numbers shifts every time you log in, which is a clever way to prevent the bad guys from taking over your account. Kudos.

The firm has kept its commissions low—$3 plus 70 cents per contract with no minimum. Trading a single contract costs $3.70 while trading 10 costs $10. The commissions and the updated trading tools make SogoTrade a reasonable choice for the bargain-seeker. We look forward to seeing how the platform develops. Had SogoTrade had these tools in place during our March review of online brokers, it would have ranked much higher.

OptionsXpress
(http://www.optionsxpress.com) recently rolled out its Xtend platform to all customers. This is a trading console that lets you place trades, get real-time quotes and track your account balance, positions and watch list from a single screen. To find Xtend, you click on Quotes from the top menu, then Streaming Quotes. Another click, on “Launch Streaming Quotes,” brings up the Xtend window, which is a Java-based application. There’s no software to download, but you might have to disable your pop-up blocker to get the window to display.

I find it peculiar that the firm is promoting the Xtend platform but doesn’t have a menu choice to make it easy to locate.

You can personalize the layout, moving the various components such as quotes, charts, and a Level II quote, which shows the publicly displayed order book for a stock. You can flip around between watch lists, current holdings, news, and options chains. Order entry is quickly accessible as well, and Xtend lets you trade stocks, options, spreads, and futures.

OptionsXpress also added an interesting feature to its basic Web platform, Ideas, which integrates several existing investing idea generators into a customer’s portfolio. The idea behind Ideas is to help investors find ways to modify their existing positions based on their current market perspective.

Chief Executive David Fisher says, “Providing the ability to quickly adjust to changing market conditions by using a variety of different investment products is what we do best at optionsXpress. The introduction of Ideas underscores that effort by delivering a diverse array of different stock, options and futures alternatives for customers to consider.”

Using Ideas requires no work on your part. Upon logging in and bringing up your holdings, those that have sparked an Ideas alert appear with a lightning-bolt icon when one of the four tools built into it has been triggered. The four tools are StrategyScan, which identifies strategies that work with the customer’s investing goals, experience and risk level; Chart Patterns, which seeks stocks that match an investor’s interests and spending limits; Trading Patterns, which show what like-minded investors are trading; and the Trade & Probability Calculator, which displays the projected risk, reward and financial feasibility of trading strategies.

For example, let’s say that your portfolio includes iShares MSCI Canada Index (ticker: EWC), an exchange-traded fund. The Ideas icon, when clicked on, opens up a display that shows three potential trading strategies for EWC, depending on whether you are bullish (purchase more stock), neutral (sell near-term calls), or bearish (buy puts). It’s a nice addition.

Posted by on 08/01 at 02:04 AM

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