Best Virtual Options Trading Simulators

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Contributor, Benzinga
December 4, 2023

While it may be possible to jump right into the options market with no experience, it’s a much better idea to gain some experience trading before you risk your money. A virtual options trading simulator can help you practice using varying order types and develop your trading strategy without risking your trading capital. If you’ve never traded options before, we highly recommend starting with one of our recommended best virtual options trading simulators before you enter the market. 

The Best Virtual Options Trading Simulators

There are dozens of best virtual options trading simulators available on the market. If you aren’t sure where you’d like to begin your trading, consider a few of our top choices below.  

Best for Desktop Trading: Power E*TRADE 

If you plan to trade with E*TRADE, you’ll find plenty of value in the broker’s Power E*TRADE platform. The Power E*TRADE platform provides you with a robust set of trading and charting tools. Practice using these tools, then transfer your strategy back to E*TRADE’s standard options trading platform when you’re ready to invest. 

Power E*TRADE also offers a comprehensive education section to help you learn more about the options market and how to use E*TRADE’s tools. The platform even offers a Snapshot Analysis tool to assist in visualizing maximum potential profits and losses, trading opportunities and exit plans without risking trading capital.  

Pros

  • You can save uninvested cash with a competitive APY to further your savings
  • You can use this platform to practice while your money is sitting by the wayside

Cons

  • The analysis tools may seem a little bit too advanced for some newer traders

Best for Retirement Savers: TD Ameritrade “thinkorswim” paperMoney

TD Ameritrade’s thinkorswim platform is renowned in the investment industry as the forerunner of trading platform analysis software. But did you know that thinkorswim also extends to mobile? A thinkorswim paperMoney account allows you to access TD Ameritrade’s groundbreaking mobile trading tools and platform using $100,000 in virtual funds. 

PaperMoney accounts offer you full access to TD Ameritrade’s massive range of tools and features — and the mobile platform allows you to perform any trade available on the desktop platform. Work on your trading strategy without impacting your trading capital and master thinkorswim’s platform with a paperMoney account. 

Pros

  • You can use up to $100,000 in practice funds to see what would happen when you make particular investments
  • This platform allows you to move from one trading device or another without any issues

Cons

  • Remember that this platform now falls under Charles Schwab and you don’t want to get lost when searching for these tools

Best for Futures Trading: TradeStation Simulated Trading

TradeStation is an excellent option for advanced and day traders, options and futures traders. The platform offers professional tools that give you a comprehensive look at the markets and the ability to execute trades that match your proprietary strategies. Plus, you can use simulated trading to test your theories and learn how the markets will respond to your choices.

TradeStation also offers a range of services that make your life easier, including:

  • Educational tools and analytical services
  • A wide variety of tradeable assets like stocks, ETFs, crypto, futures, bonds, etc.
  • Commission-free trades on stocks and most ETFs
  • Fully-functional mobile app
  • Taxable, joint, IRA and Roth IRA accounts
  • Account minimums from $0 to $2000

Reach out to the customer service team or register for an account today. You can transfer your portfolio to TradeStation or build a brand new portfolio with unique and exciting assets.

Pros

  • Low minimums make it easier for newer investors to buy in
  • You can use the mobile app if you’re often on the move

Cons

  • You may feel like the choice of accounts is a bit confusing because you may not be planning for retirement, etc.

Best for Options Trading: eOption

With a paper trading simulator, you can use eOption to practice on the open market and learn what’s going on with your account. As you make trades in your paper trading account, you can see how the market will response, how the sharks would respond and what you should do next. You can also learn about slippage and become an expert trader without spending any of your own money.

Pros

  • This platform makes it easier for you to learn where the money is going
  • You can see a real-time response to trades you might make

Cons

  • This platform may seem a little too advanced for some investors

Best for New Day Traders: Warrior Trading

Warrior Trading is well known for its training courses, but there’s also a paper trading simulator you can use to learn how your options trades would turn out given the current market conditions. You get Level 2 quotes, real-time market responses, fast and accurate reports along with a safe place to pretend to spend your money, practice and get to know the options market.

Pros

  • This platform helps with training and simulations
  • You can often relate to this platform because it was found by someone who came to trading as a second career

Cons

  • You may not want to approach paper trading from the “training” perspective

What is Virtual Options Trading?

Virtual options trading allows you to practice trading options without risking money. When you sign up with a simulator, you’ll receive an account prefunded with a set amount of trading funds and access to a mock options market. Most options simulators attempt to mimic the real NASDAQ, New York Stock Exchange and other stock markets as closely as possible.

Using your virtual trading platform, you’ll practice reading options chains and placing options orders without the possibility of losing money. You can practice buying, selling and executing orders during regular market hours, which can allow you to explore platform features and strategies without the possibility of losing your capital. 

Pros and Cons of Options Trading

Understanding both the pros and cons of options trading is important. Let’s take a look at some of the benefits and drawbacks of options. 

Pros

  • Limited risk: As the buyer, you can choose to execute an options contract or allow it to expire if fulfilling the contract would mean a financial loss.If you choose to allow an options contract to expire, you’ll only lose the money you put down in a deposit. If you execute the contract, there’s no limit to the amount of profit that you can take if you go on to sell the asset.
  • Less upfront financial commitment: When you purchase an options contract, you’ll only need to pay a premium upfront. If you exercise the option, then you will have to put up the money required to buy the stock at the strike price of the option. You can also sell the option back before expiration to avoid this. You only pay a fraction of the stock's price to hold the option and participate in favorable market moves. You’ll tie up less trading capital using an option position instead of holding a position in the underlying stock.
  • Ability to ensure a stock’s price: Options allow you to speculate on a stock’s future without investing in the full price of the stock. For example, imagine that you want to purchase shares of Company X’s stock, but you aren’t sure if their stock will increase or decrease in the future. Buying an options contract on a stock lets you purchase the stock at its strike price at or before the expiration, although you also need to factor in the initial premium paid to get your overall purchase price for the stock.

Con

  • Potential for more loss as a seller: If you sell a call options contract and the price of the stock you hold goes up, you generally lose money if the stock price ends above the strike price (plus the premium you received at expiration) and you are still holding the short position. This can mean very high losses in exchange for a relatively small reward.

How Virtual Trading Platforms Work

Virtual options trading is similar to real options trading. Your virtual options simulator will provide you with a virtual wallet preloaded with a set amount of virtual currency. Your simulator will then mimic the actual circumstances of the current options market as closely as possible, allowing you to practice your trading strategy as the market changes. As you practice “buying” and “selling” puts and calls, you’ll track how well you’re doing by monitoring your demo account movements.

If you choose a simulator associated with a brokerage that offers options trading, you’ll also get to practice using your broker’s charting and analysis software. These simulators also include standard fees and commission along with your trades so you can better estimate what you’ll pay in fees.

Even the best simulator cannot perfectly mimic market conditions. Your options simulator won’t be able to account for your personal risk tolerance, trading horizon, taxation needs and more. You also cannot perfectly mimic the market psychology that comes with real options trading, as actual cash is never at risk. However, this relatively stress-free environment is the ideal place for a beginning trader to start learning

Benzinga Options Newsletter

Though market simulators can be helpful to beginners, up-to-the-minute market knowledge is the most powerful tool that you can have at your disposal. Do you have time to spend hours a day researching the morning’s most profitable trades — and the skill to analyze the markets accordingly?

If you prefer to leave your research to the professionals, subscribe to Benzinga Stocks To Watch today. You’ll receive daily recommendations and breaking news from the industry’s top analysts, researchers and news correspondents delivered straight to your inbox before the market opens each day. Trade-ready and easy for even total beginners to understand, you can’t afford to trade without Benzinga Stocks To Watch in your email list.

Making Your Way Into the Options Market

If you’ve traded stocks before, you might assume that you’ll have no problem entering the options market. However, options trading is completely different than stock trading — and you may even find yourself overwhelmed when reading your first options chain. Even the most experienced stock trader can learn from a virtual options simulator or a paper trading account. And in an industry where knowledge is power, you’ll want to get as much practice as possible before you risk any of your trading capital.

Frequently Asked Questions

Q

How do I start virtual options trading?

A

There are several steps including opening an account, starting trading and monitoring your positions.

Q

What are good virtual options trading apps?

A

E*TRADE and TD Ameritrade are the best for this particular mode of trading. 

Q

What are the best virtual options trading simulators?

A

You will find a list of the best virtual options trading simulators on the list above.

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