CHICAGO Oct 28 A team of veteran traders in the brokerage industry has launched a new online brokerage company that specializes in option trading for the self-directed investor.
The brokerage, called trade MONSTER, has been operating since Oct. 15 but made its official debut on Tuesday.
Its offerings include trading in equities, exchange-traded funds, mutual funds and fixed income products.
The new brokerage is a subsidiary of Chicago-based optionMONSTER Holdings Inc, a provider of news and analysis founded in 2006 by veteran option traders Jon and Pete Najarian and entrepreneur Dirk Mueller.
Online brokers are competing fiercely for the attention of small investors. The new entry is going up against larger rivals such as TD Ameritrade Holding Corp (AMTD.O) and Charles Schwab SCHW.O, as well as optionsXpress Holdings Inc OXPS.O and thinkorswim Group SWIM.O, both Chicago-based.
All of trade MONSTER's capabilities are located on its web site and customers will not have to download software applications, optionMONSTER Chief Executive Mueller said in a phone interview.
The brokerage's niche will be equity options trading with an emphasis on option education.
U.S. options volume is booming as more participants become interested in trading equity options -- contracts that give their owners the right to buy or sell stocks at predetermined prices within a set period of time to manage stock market risk and/or to generate income.
"These brokerages provide tools necessary for retail investors to understand the intricacies of the options market and easy access to liquidity to meet their investment goals," said Sang Lee, an analyst with Boston consultancy Aite Group.
"Options trading is an attractive offering for an online broker because the market is very liquid. The trading volume is there and the spreads are coming down. It is certainty very attractive for educated retail investors to participate in the options market," Lee said. (Reporting by Doris Frankel; Editing by Dan Grebler)