optionsXpress Continues To Deliver - Interview With CEO David Fisher (OXPS)

optionsXpress Holdings, Inc. OXPS is a publicly traded online brokerage company located in Chicago, Illinois. The optionsXpress (OXPS) trading platform offers customers brokerage services for options, stocks, futures, ETFs, mutual funds and fixed income investments. The firm was founded in 2000, and it has received numerous top rankings by personal finance publications, including the top-star ranking for five years in a row by Barrons. Forbes and Kiplinger's have also recognized optionsXpress for their outstanding platform and service.

This interview is also available as an episode of the Benzinga Podcast.

optionsXpress CEO David Fisher has been with the company since 2004, when he became the Chief Financial Officer. Prior to this, he served as the CFO of both Potbelly Sandwich Works and Prism Financial Corporation. He has been profiled in Crain's Chicago Business, making the publication's 40 under 40 list in 2007. He is a member of the Illinois bar and serves as an Off-Floor Director on the Chicago Board Options Exchange. David was nice enough to grant Benzinga an exclusive interview to talk about the online brokerage industry and the exciting growth he is helping to drive at optionsXpress. Mr. Fisher is a tremendous asset for his brand and his knowledge, enthusiasm and vision are sure to continue to drive the optionsXpress business forward in the coming years. Investors looking for a leading online brokerage platform combined with outstanding customer service need to visit optionsXpress.com. Here are the excerpts of our conversation with David Fisher, please listen to the podcast for the full recording.

Q:Where do you see the online brokerage industry headed over the next couple of years? Consolidation? Expansion? Could E-Trade ETFC be acquired? What is your view?

A: The industry continues to grow. Everyday more people realize how they can benefit by adding options to their portfolio - enhance yields, generate income, protect their downside by buying insurance using these products. The industry has had a great growth run over the last ten years, but we see that continuing. We really see some exciting growth over the next few years, particularly as we come out of this financial crisis. People are reengaging with the markets and we really see an exciting time for the industry. Whether there will be consolidation, I don't know, that is harder to predict. We have a great growth market, firms are doing well. It certainly helps to be larger in size in our industry and we've certainly benefitted by being one of the first to the industry with over 350,000 accounts now. We are excited about the future.

Q: Does account growth slow when the market falls? Do people look to get more protection through the options market? What have you seen over the last couple months?

A: Well the great thing about using options strategies and using futures products is that you use them in all different kinds of market environments. People that tend to be stock only investors are really just long, and they are really just waiting for the market to go up, and if the market is going down or sideways it is really hard to find good investment strategies. With options, there are strategies that you can obviously use in up, down, and sideways markets. We see our customers do well in both up and down markets, and we see good new account growth in up and down markets, but clearly in better economic times you have better account growth. When people are getting bonuses and raises, when people have more money to invest and have more money to put into the market clearly that translates into better overall times for the industry. If you look at the end of 2009 and the first part of 2010 it was certainly slower, but we are starting to feel that momentum change. Through March, April, and now May I think we are starting to see consumer confidence increase. We are not out of the woods, but people are definitely reengaging at a new level. We are seeing account growth pick up significantly, and that is why we are very excited about the future.

Q: A lot of people still have no idea what an option does. Could you give a short explanation of how the derivative products work?

A: One of the great things about options is that there are many different strategies that you can do to enhance your portfolio based on your views of the market. So lets say that you have a big concentrated stock position and you don't want to sell. Maybe you don't want to pay taxes on it, for example. Maybe you are concerned about the volatility we have seen recently. One thing that you could do is buy a put to insure your portfolio. Its basically like buying insurance on a house or car. You pay a premium for a put option and if that stock falls below a certain price, you have the right to sell the stock at the strike price of the option contract.

Q: For investors who are either unsure about, or inexperienced with options, can they call optionsXpress or get advice on how they can use options to buy insurance on their stock positions? How do they go about it if they are unfamiliar with the options market?

A: Absolutely. One of the great things that we do as an online broker is provide a ton of education, a ton of research and a ton of tools. If you come to a site like us, it is very easy to figure out how to start employing these strategies and use them to enhance your portfolio. We have tools and research for everyone from the very novice investor to the most sophisticated investors who are looking to do the most cutting edge things and everything in between. This is a full service online broker.

Q: What makes optionsXpress different than other online brokers? How do you differentiate yourselves?

A: First and foremost we are dedicated to investors that want to use derivative products - options and futures. That is why people come to us. If you just want to buy 100 shares of Microsoft MSFT, there are dozens of online brokers who can facilitate that. We do it. We offer stocks, ETFs, bonds and mutual funds along with our options and futures, but it is hard to really differentiate yourself. But when you are using the extra products, like derivatives, when it comes to our research, tools and education they are all focused on options and futures. Customers that want to use these products have a great overall experience at optionsXpress. That is our focus.

Q: Can you tell us about your marketing. What is your strategy for 2010 and 2011?

A: When we think about marketing and growing the business, most of it is focused on showing people why these products can really benefit them and helping to grow the industry. Social media is an increasingly important part of any company's marketing strategy. We certainly use components of it. We love components of social marketing that search for "wisdom of the crowd" ideas - help people help each other. We try to help investors distill the vast array of information that is out there and give them the tools to really guide their investment strategy.

Q: Are you working on any new products or features that you are looking to introduce this year or in 2011?

A: We are always working on new products and features. Innovation is an extremely important part of what we do at optionsXpress. Earlier this month, we had a very exciting launch for our Xtend product. It is a downloaded software product for active traders. It is highly customizable but with a really easy to use and easy to configure interface. So unlike a lot of downloaded active trader products that are very clunky, very cumbersome, and very difficult to get up and running, ours puts all of that power, streaming functionality, and one quick trading ability in front of you, but with a much easier to use, intuitive interface than anything out there. We have had a great initial response to it and we will be adding features to it throughout the year We will also have some other exciting products coming out this year as well.

Q: Can you tell us how you became affiliated with optionsXpress and about the company's history?

A: I came in a few years after the company was founded. It was founded by three guys - Ned Bennett, Jim Gray and David Kalt. They were all options traders involved in different areas of the business. David was a retail investor, Ned was a broker and Jim Gray was a market maker. They saw there was a big opportunity in bringing these products to retail investors. The big online brokers at the time really weren't taking these products seriously. They didn't see the market, they didn't see the demand for the product, so it was a great opportunity for the business. Since that time there has been tremendous growth in the options business and we have both contributed to it and benefitted from it by riding that wave.

Q: Now some fun questions. What was your worst or first job?

A: My first job was as a caddy at a golf course. My worst job was after my freshman year of college. I worked for the sewer department in my hometown and I had to clean out storm sewers all summer. Not fun at all.

Q: How did you end up doing that job?

A: It was very high paying. I was looking to make some money after spending too much money during my freshman year of college.

Q: Benzinga is a young company. If you could give us, or any other new company some advice, what would it be?

A: It is all about the people and the culture. Your business model will probably change over time. The market dynamics will probably change over time, but if you get good, smart people and you create a fun culture where people want to be and you are all rolling in the same direction, a lot of great things can come about.