To differentiate its services from the pack of competitors in the options trading space— OptionsHouse is offering flat-fee pricing. It will charge a commission of $9.95 per trade — with no incremental per contract charges.

“We do offer a very competitive rate and do think it’s fundamentally different in options trading,” says John Hass, co-CEO of OptionsHouse located in Chicago. “All of our competitors charge a per contract fee on top of a base rate or a base rate with a minimum, so the more options contracts you trade the higher the fee."

According to the OptionsHouse Web site, which compares its flat fee $9.95 commission against other the other options brokers, including optionsXpress, E*Trade, Fidelity Investments, Charles Schwab, TD Ameritrade and Scottrade — its rate is cheaper. For example, Fidelity charges a lower per contract rate of $0.75 but the base rate is $19.95 so that executing 10 contracts would cost $27.45, whereas E*Trade charges a $12.99 base rate plus $1.25 per contract, so a trade with 10 contracts would come to $25.49.

“We’ve tried to keep it very simple and straight forward so that people can think about their trades and not about their commissions,” says Hass. But Hass also recognizes he can’t “keep customers based on rates alone. “We do provide good technology and customer service as well,” adds the CEO.

Just as OptionsHouse is simplifying its rate structure, it’s also simplifying its technology for trading, he notes. The new firm is leveraging its experience with PEAK6 which had “great order routing, tools and infrastructure,” to fill a void in the market for active and savvy traders, says Hass who is was a former partner with Goldman Sachs on the investment banking side in the Financial Institutions Group covering broker-dealers.

Daniel Rosenthal, co-CEO of OptionsHouse, who is the former CTO of PEAK6, started building the new discount broker’s Web site with the basic components that PEAK6 had, namely direct-to-exchange data feeds and order routing technology that works for its professional traders. Part of the strategy that worked for PEAK6 is simplifying the trading interfaces. For example, Rosenthal says a good options trader could trade 25-to-35 names, but today, a trader at Peak6 can trade 500-to-600 names. Linking together things such as risk management with execution and execution with trading tools has helped as well as simplifying interfaces so that everything is point and click and is context sensitive, he adds.

Rosenthal built the OptionsHouse platform over the past year-and-a half, which is based on Java and Ajax, not as a traditional HTML platform, so that it almost works like a client server and software-based trading platform, he says.

There are also context-sensitive screens that remove some of the steps or calculations that the trader had to do. For example, if a user clicks on a position, the screen brings up an order on the position trade. It also brings up a context sensitive menu that says, ‘trade this option’ and if the user clicks, it will bring up a pre-filled ticket. Similarly, if the trader goes to the order pane, which shows all the orders that have been filled or worked in the market, the user can click on a particular execution for that order which shows where the order went and where it was filled.

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