In The Money

Australian / Overseas Investors

The simple option strategies that always beat the market

Heather Cullen

Trading in the US for Australian and other Overseas Investors

International Account

If you don’t live in the U.S. then you need an international brokerage account to be able to trade in the US. Luckily this is relatively easy and can be done from overseas.

The brokerage costs in the US are just a fraction of what they are in many other countries, with some brokers having no brokerage fees at all as long as you do everything online. 

Things to look for in a broker

Brokers vary widely, and these are the main things you should check:
 
  • Low brokerage fees
  • Initial investment amount
  • Ability to contact them
  • Good trading platform

The following is a non-exhaustive list of brokers some of which I have tried and some that I haven’t. I will clearly mark the difference and show if I have personally traded with them.

For your peace of mind please note that I am not affiliated in any way with or receiving kick-backs from any of the brokers, other than as a customer trading through them.

Charles Schwab
  • BROKERAGE: $0 for stocks, $0.65 for options
  • INITIAL INVESTMENT:  $25K USD Individual, $100K USD Trust (SMSFs)
  • CONTACT:  Toll-free phone number and online secure messaging.
  • TRADING PLATFORM: real-time quotes, choice of trading platforms including SteetSmartEdge which I highly recommend. (2022 Update: there is now a Streetsmart Central (SSC) and this is now where you can find real time option graphs. I will do a blog update on it sometime if there is enough demand.)

I have a couple of accounts with Charles Schwab, and have found them, in general, to be very good.Their brokerage rates are low unless you need to use broker-assisted trading, and I don’t know anyone who has used that for years.

 

PLATFORMS: Their trading platform StreetSmart Edge (SSE) is excellent, and provides real time graphing and data. I particularly like the way that it provides this graphing and data for options as well, something I have not seen on any other platform but could well be available since I last looked. (Update 2022: Streetsmart Central is the new platform and has the real time option graphs. They are no longer available on SSE)

SUPPORT: They usually pick up the phone in good time, and I have always found the staff on the other end easy to understand and helpful.

RESERVATIONS: My one beef with them is the restrictions they place on what I can do in my SMSF account, which they don’t do in my personal account. I can’t do spreads or anything other than long and short calls.

RECOMMENDATION: The big downside for some is, of course, the $25K minimum. But if this is not a problem for you then Charles Schwab is a good choice.

Firstrade

WEBSITE: Firstrade.com

As well there is a useful page of International Account FAQs.

  • BROKERAGE: $0 for stocks, $0 for options
  • INITIAL INVESTMENT:  No minimum deposit.
  • CONTACT:  Phone number Mon- Fri 8AM – 6PM EST and email.
  • TRADING PLATFORM: real-time quotes, functional but a bit clunky.

I started trading with Firstrade around 3 years ago. They were one of the first brokers to have zero fees. At the time I couldn’t believe it to be true so I opened an account and checked – it was true! In 3 years I have never had to pay any sort of brokerage.

PLATFORM: The platform is perfectly adequate for ITM, you have all the information you need and can easily place your trades. Its not quite in the same league as SSE but that’s more of a ‘nice to have’ than an actual requirement.

RESERVATIONS: Only that it is a cut-price brokerage with no bells and whistles.
RECOMMENDATION: Firstrade is a good choice if you want to get started but your initial funds are limited.

Interactive Brokers
  • BROKERAGE: $0.15 – $0.65 USD for options, min $1 USD per contract.
  • INITIAL INVESTMENT:  No minimum deposit, it has recently done away with the $10K USD minimum.
  • CONTACT:  No contact details on their website.
  • TRADING PLATFORM: choice of platforms

I am afraid that I have nothing nice to say about Interactive brokers, or IBKR as they are sometimes known.

Remember in In The Money where I gave an example of a bad broker? Well, that was Interactive Brokers.

RECOMMENDATION: I cannot recommend them, my dealings with them were time-wasting, costly and frustrating. I would suggest giving them a wide berth!

Saxo Markets

WEBSITE: Home.Saxo/en-au

  • BROKERAGE: $5 AUD for stocks, $10 AUD for options.
  • INITIAL INVESTMENT:  $10,000 AUD
  • CONTACT:  Contact details on their website, but hidden in deep nested page!
  • TRADING PLATFORM: SaxoTraderGO

I have had three accounts with Saxo for many years. Initially they were good because it was the only way to trade options on the Amsterdam Exchange and EuroSTOXX.

Now? Not so much of a fan.

PLATFORM: The platform used to be good, but now I find it a bit ‘meh’, and there is always a hassle if you contact them because they appear to have 2 account numbers for every account, plus an extra one for a customer number.

SUPPORT: I keep the accounts open because in them I have some AEX and EUROSTOXX  options bought in 2015 with an expiry of 2024. Saxo got on my bad side because the day after I had bought them I decided to double all the positions, but then couldn’t because they changed the rules. No explanation, just that from now on I could only go out to 2 years, not 9. Naturally I was not impressed. However, they couldn’t go back on the trades already done so the options have been sitting in the accounts all this time, and appreciating very nicely!

RECOMMENDATION: These are the brokers you don’t want to contact unless you really have to, so I am afraid that I cannot recommend.

Other brokers

Other brokers that I have had no experience of but have found the information by googling are:

  1. Fidelity: no International Accounts
  2. TDAmeritrade: No International Account
  3. EToro: No option trading
  4. CityIndex: No options trading
  5. TastyWorks: Not enough info on website to be sure.
  6. IG Markets: trade options, but with CFDs.

There are probably more, so feel free to google.

Australian Banks

 

Australian banks also offer trading USA options, but their charges are horrendous:

  • Commsec: $65 USD or 0.75% , plus $1.1 per contract
  • NAB – No US Options
  • Westpac: USD $57.95 or 0.65% whichever is greater, plus $1.10 per contract. (plus USD $63.50 account inactivity fee, $90 per transfer, $2 per month holding fee!)
  • ANZ: $59 or 0.59%, plus $20 per holding electronic transfer in, $100 per holding out, and others. Not sure if this applies to options or just shares.
  • Not sure how anyone can afford these rates!
Disclaimer

I have tried to be as accurate as I can, but I take no responsibility for the correctness of the above figures. I recommend that you check them out thoroughly yourself before deciding on a broker.

The opinions are mine, and mine alone, and based on my current knowledge and experience.

In The Money

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Heather Cullen

What do you think?

If you have had experience with any of these brokers, or if you have another one to recommend or advise against please let me know by filling out the form below.

ITM Updates

Thank you – your message has been sent. Please note that  as of July 2022 Heather will answer all questions in the ITM Blog, not individually. You will be notified when there is a new blog post. Happy trading!