My Experience Signing Up For Options Xpress

Back in January, a new company called Options Xpress was offering a sweet $100 signup bonus for new accounts funded with $500. The only catch was that you had to leave the money in for six months or the bonus would be revoked. It wasn't even necessary to place a trade. Naturally, I signed up.

Right away, I was really impressed by the email they sent me when they received my account opening document in the mail. Instead of leaving me to wonder when it got there, they took the initiative to tell me it had arrived in a well-written letter that made me feel pleased about my decision to do business with them.

Welcome to optionsXpress! You have chosen the online broker rated an "unprecedented 4 1/2 stars" by Barron's Magazine. We have received and are currently processing the documentation you sent to us. We will contact you again shortly as we process this paperwork. Below is a summary of the documents we received today. If you feel something is missing or incorrect, please feel free to contact us and we will be happy to investigate any concerns for you. Otherwise, relax, sit back, and get ready to enjoy all of the market-leading tools and features that make our firm the best choice for direct investing.

Documents received today:

New Account Overview
This is the core document that every new client must complete and return. We will use this to verify your desired trading level and account type, and will notify you when your account has been established with a trading enabled email. Depending on the type of account you are opening, you will receive this email within 2-6 business days.

Our success is measured by your satisfaction with optionsXpress, so please feel free to contact us if you have any questions, or if we can be of assistance to you. We are always happy to help.

Sincerely,

Ned Bennett, CEO

This kind of personalized attention and extra effort really go a long way towards creating a positive relationship with customers. (I should mention here that Fidelity also consistently impresses me with their level of customer service.)

Then, I learned that it was possible to get another $100 bonus for referring a friend. Not only would I get a bonus, but my friend would, too. Additionally, my friend could sign up using the same $100 bonus link I did, giving them a total of $200 for signing up! The only catch was that the friend had to make one trade for the refer-a-friend bonus to kick in, and trades cost $15. Thus, the real reward would be closer to $185.

Unfortunately, I haven't had much luck convincing my friends that these signup bonuses are worth it and don't have significant strings attached even when I tell them I've made something like $2500 over the past two or three years with all the signup bonuses I've taken advantage of. I did convince one person to sign up, though. If I were actually interested in making trades, I could have chosen a signup bonus of ten free trades instead of $100, which at $15 a trade would actually a be a better value for some people. My friend purchased one share of stock at $2 to activate the bonus. The reason for purchasing such a small amount of stock is that it eliminates the need to sell the stock later to get one's money out, thus eliminating the need to pay another trading fee. The stock can simply languish in the account forever. This same strategy can be employed with other online trading accounts offering signup bonuses. Also, despite its name, Options Xpress allows clients to purchase stocks, futures, mutual funds, bonds, and covered calls in addition to options.

I'm happy to report that my friend and I successfully received both the $100 signup bonus and the $100 refer-a-friend bonus. It did take an email from each of us to get the second bonus when it was not credited on time. However, we were not hassled about it at all, so it wasn't really any trouble.

Opened account with $500: 1/31/08
Received $100 account opening bonus: 4/14/08
Friend received account opening bonus: 4/14/08
Received $100 bonus for referring a friend: 6/2/08
Friend received $100 bonus for being referred: 6/2/08

As you can see, it only took about four months for me to earn $200 with virtually no effort. All in all, it probably took me an hour to fill out the paperwork, mail it in, refer a friend, and follow up on the bonuses. I don't currently have any other way to earn $200 an hour or to earn a 40% return in four months, so I'd say this was a pretty good deal and a pretty fantastic use of my time even though I will have to pay taxes on it at my marginal tax rate next April (I expect it to be reported on a 1099-MISC). Also, unlike credit reports, brokerage accounts don't show up on your credit report, so opening another account didn't have any negative impact on my credit score.

Unfortunately, Options Xpress is no longer offering $100 bonuses for new accounts or referred friends. They are still offering 10 free trades for referring a friend, however.

Photo by stopnlook

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