For traders specifically looking to trade options, choosing the best options trading platform can be particularly crucial. Most major brokers have options trading capabilities, but not every platform is geared specifically for options trading. Below, we’re taking a look at the top choices for these trading platforms, from free options trading to paid platforms.
Best Options Brokers:
- Best for Passive Investors: Charles Schwab
- Best Technology: TradeStation
- Best for Beginners: TD Ameritrade
- Best for Marginal Accounts: Interactive Brokers
- Best for Mobile Traders: E*TRADE
- Best Derivatives Only Broker: tastyworks
- Best for Social Traders: Gatsby
- Honorable Mention: eOption
In general, options trading is a very profitable offering for brokers, so there are plenty of great deals out there for traders.
Best for Options Traders
Low commissions are just the tip of the iceberg when it comes to choosing the best option trading platform. Traders need to consider hidden fees, such as platform fees and data fees.
Different traders have different skill levels, trading strategies, and needs. Options trading can be complicated, and beginners need to make sure to find a platform with plenty of educational resources and guidance. Advanced traders need to look for professional-grade features and research. Before choosing the right broker, each trader needs to consider his or her trading style and which features are most important in maximizing profitability.
Here’s an overview of some of the top option-trading platforms based on several different criteria.
1. Charles Schwab
What do you need Schwab to do for you?
Help you save for retirement? Trade stocks or options? Or more?
If you’re a passive investor, Schwab can guide you through handling your money to prep for retirement. Schwab leads you through the process:
- Use the Retirement Savings Calculator to understand where you are currently and how much you can (and want to!) save.
- Strategize. Learn how to save, then estimate your retirement needs.
- Build your portfolio, all the while keeping your long-term goals and risk tolerance in mind.
- Choose the right plan for you, whether you prefer tax-advantaged growth or have your own business.
If you’re a trader, Schwab makes online stock trading affordable. It offers $0 online equity commissions for:
- U.S. stocks, including over-the-counter stocks (OTCs), IPOs and more.
- Schwab Stock Slices, or fractional shares: Want to own any company in the S&P 500 for as little as $5? You can!
- International stocks: You can trade American Depositary Receipts (ADRs), foreign ordinaries and Canadian stocks through Schwab.
Trade options with Schwab for less — and gain more technology (like StreetSmart Edge on Schwab.com and Schwab mobile apps). You’ll find:
- $0 base + $0.65 per options contract
- Intuitive tools and platforms
- Support from options specialists
- Education and expert commentary
Schwab’s Idea Hub canvasses the market for trade ideas based on market action, volatility, earnings and income-based strategies. Its Trade and Probability Calculator helps you assess the potential risk, reward and pricing scenarios of a trade before you take action. You can also place single, multi-leg and conditional orders using the intuitive All-in-One Trade Ticket.
Finally, Schwab’s Walk Limit order type works your options orders for you to try to obtain a favorable execution price.
2. Best for Advanced Traders: TradeStation
TradeStation is for advanced traders who need a comprehensive platform. The brokerage offers an impressive range of investable assets as frequent and professional traders appreciate its wide range of analysis tools. TradeStation’s app is also equally effective, offering full platform capabilities.
TradeStation offers 2 distinct account types: its basic TS GO account aimed at new trades and its more in-depth TS Select account aimed at more advanced traders looking for a comprehensive set of tools and research options. There’s no minimum account balance required to open a TS GO account. TS Select accounts require a $2,000 minimum deposit.
If you’re new to trading, you’ll love TradeStation’s Simulated Trading tool. Its Simulated Trading tool allows you to practice entering buy and sell orders, using TradeStation’s suite of charting and analysis tools and using your trading strategy without risking any of your own money.
3. Best for Beginners: TD Ameritrade
There’s no better place to get started trading options than TD Ameritrade. Right off the bat, TD Ameritrade’s $0 account minimum makes the platform accessible to every options trader. The Trade Architect platform provides a simple, easy-to-navigate trading environment that isn’t intimidating for new options traders and provides easy order execution.
Traders have access to 24/7 customer support over the phone, as well as email support and more than 100 local branches. The platform also offers virtual trading, so beginners can get a feel for the market without putting real money at risk. For more advanced traders, the thinkorswim platform provides professional-grade advances option trading features, such as Options Statistics for identifying trading opportunities and the Sizzle Index for identifying the hottest contracts.
TD Ameritrade recently completed an acquisition of Scottrade, which will provide options traders with another level of flexibility as well. Right now, TD Ameritrade charges $0 fin options based fess and $0.65 for options per contract.
4. Best for Marginal Accounts: Interactive Brokers
The Interactive Brokers Trader Workstation provides a comprehensive list of options trading features and has been compared to the look and feel of a commercial airline cockpit. The workstation includes integrated tools such as IB Risk Navigator, Options Analytics and Model Navigator. It has a configurable format, quick-click order entry capabilities, and is extremely customizable.
The OptionTrader Combo tab allows traders to monitor price variations, view all available chains or filter for specific contracts and configure columns to view calculated model prices, implied volatilities open interest and Greeks.
Interactive Brokers also helps active traders minimize commissions and fees as well. Interactive Brokers charges nothing in options based fees but charges $0.65 per contract fee for options.
5. Best for Mobile Traders: E*TRADE
E*TRADE’s Power E*TRADE platform and mobile app are the gold standards of option trading platforms. Power E*TRADE currently offers traders premium-quality tools without the premium price tag.
According to a customer service rep, the long-term plan is to have the Power E*TRADE platform replace E*TRADE Pro as the premium service, but for now, it is free for all E*TRADE users.
Power E*TRADE is the perfect combination of speed, quality, tools, and navigation capabilities. The platform offers virtual trading for testing strategies. The option chain screen provides access to customizable real-time streaming option chains with up to 30 columns. The tradeLAB Snapshot Analysis breaks down risk/reward in an easy-to-understand way, indicating pros and cons as well as key events to watch for and a profit and loss chart. The strategySEEK tool allows users to scan market data and identify potential trading strategies.
For all E*TRADE’s advances option trading features, the broker charges $0 in options based fees and $0.65 for options per contract.
6. Best Derivatives Only Broker: tastyworks
Tastyworks allows opening of an individual, entity/trust or joint account, and the account type held with the brokerage can be margin, cash or retirement. In margin trading, you are allowed to trade with borrowed capital, facilitating the use of all trading strategies available with the broker, while a cash account requires that you fully fund transactions, and also restricts usage of some trading strategies such as spread and uncovered options.
The web-based trading platform allows access from any computer and gives all functionalities as the downloadable version. Some of the features in the browser version is the Follow page, where you can follow the firm’s curated experts’ trade, Trade Curve, which allows visualization of trades easily and the Trade History option, which helps you analyze your trades.
Though opening an account is fairly easy, a prospective client is required to register with tastyworks ahead of time with an email address, username, and password, as well as:
- Address and phone numbers,
- Citizenship status,
- Personal information such as Social Security Number and employment information,
- Bank details and
- Copies of identity and address proofs.
Once an account is registered, it normally takes one to three days to be approved.
7. Best for Social Traders: Gatsby
It can be intimidating if you’re not a current follower of trade lingo or a professional trade enthusiast, but that’s why Gatsby has created its platform. Gatsby merges everyone’s resources and expertise to give you the chance to optimize trading strategies.
Gatsby leaves the commissions for other brokers so that you can begin earning instantly after signing up, and ss a new trader or professional, you’ll have the option to trade for companies and ETFs.
If you don’t want to to trade for companies? You have the choice to trade against them.
8. Honorable Mention: eOption
eOption provides an industry solution to active traders looking to avoid the high costs associated with their trade frequency.
They specialize in options trading and pride themselves in having some of the lowest commissions and margins among their competitors. eOptions offerings don’t stop there. Investors interested in ETFs and stocks can also benefit from eOption’s low fees.
As for their low margin rates, eOption stands out among the competition. Their base rate for an account with a balance of $49,999 or lower is 7% and comes in at 4.5% for accounts with $1 million and over.
What is Options Trading?
When it comes to the stock market, most people think no further than buying and selling individual stocks. Truthfully, the process of options trading isn’t much different than stock trading.
However, an option is simply a contract to buy or sell a stock at a pre-negotiated price and by a certain date. Simple as that. Learn more about how to trade options.
Options traders bet on which direction they think the price of a stock will go. Options contracts can be based on a wide variety of underlying securities, however, and many different types of orders can be placed, which makes them more versatile than stocks.
For example, those trading options can decide whether the prices could go up or down on the following:
- Individual Stocks
- Foreign currency
Make sense? Sure, it does.
Buying and Selling Options
To buy options, you simply choose exactly what you’d like to buy and how many, and then place a buy to open order with a broker. If your order goes up or down in value, you have some options. At any rate, you can:
- Sell at the agreed-upon price
- Sell the contract to another investor
- Let the contract expire
Enter calls and puts, too.
Compare Options Brokers
Still can’t decide if the above brokers are for you? Check out this side-by-side comparison for a bird’s-eye view.
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