Choices trading has become extremely popular with retail investors over the past 15 years. Our best options stockbrokers have a wealth of tools, including portfolio margining, that help you measure and manage risk as you determine which customers to place. They also include valuable education that helps you grow in sophistication as an options trader.
The commission house for options trades tends to be higher and more complicated than its equivalent for stock trades. Typically, there is a wretched fee, plus a commission per contract being traded. Certain strategies involve 2 to 4 legs (or even more), which can get costly on a per-trade basis, as it includes several base charges. Investors with fairly large portfolios can take head start of portfolio margining at certain brokers, a practice that assesses the total risk inherent in a portfolio that holds stocks and derivatives.
Best for Options Trading
Our list of the top five brokers for options trading:
- Interactive Brokers
- TD Ameritrade (thinkorswim)
- E*Truck (Power E*TRADE)
- Charles Schwab (StreetSmart platforms)
- Account Minimum: $0
- Fees: $0.005 per serving for the standard platform, $0 for IBKR Lite
Interactive Brokers had a long-standing reputation for low prices, a difficult platform and terrible service that catered to hyperactive traders. That reputation has changed considerably in the last three to four years as the steadfast began to pursue less active and less sophisticated customers. The company’s Trader Workstation platform, available as either a downloadable coupled or a website, has become friendlier and more customizable. Their mobile apps are designed to operate with minimum typewriting, instead, utilizing wheels and voice commands.
A relatively new feature, IBot, lets you ask questions in plain English and get a excitable answer, rather than digging around the platform. For example, you can ask IBot to display a particular strike and expiry season by typing (or saying) “Show options chain for GOOG for the next three expirations.”
Options traders can set up a spread on the double and roll it to a future expiry with just a couple of clicks. IB’s Probability Lab lets you simulate a potential trade formerly using real money.
You can only display streaming quotes on one device at a time, so if you’ve got the website up on your computer and then log in to your facile app, one platform will be automatically restricted to snapshot quotes. Accounts with less than $100,000 in assets pay a least fee of $10/month and may have to pay additional fees for real-time data. The web version of Trader Workstation lacks some of the stresses in the downloadable platform, but all watchlists and alerts are shared.
No account minimum and no per-leg base fee
Margin rates are the lowest of all stockjobbers surveyed
Dozens of options-oriented lessons
- Account Minimum: $10,000 (web), $25,000 (software)
- Fees: Max $4.50/stock swap, $0.65/options contract. No charge per leg.
- Best for: Cost-conscious & active traders.
Lightspeed is a agent designed to meet the needs of experienced and very active options traders. Lightspeed provides a dedicated options-trading rostrum (Livevol X) and several options analytical tools – such as historical options Greeks and skews data – not offered by other go-betweens. An array of scanners in the Lightspeed Trader platform helps spot trading opportunities, and the platform’s advanced charting marks are extremely customizable.
For portfolio analysis, you can group your positions by underlying symbol, which helps prolific businessmen determine which strategies are working. You’ll also find a profit-and-loss risk graph for complex strategies. The platform effected very well during the recent trading surges.
Mobile and web-based apps, however, do not allow futures business or direct market access. This is not an appropriate platform for new options traders.
Low per-contract commissions (with no per-leg point of departure charge)
Terrific order execution software generates price improvement
Livevol X platform has no monthly charge
Great balance required to open an account
Lightspeed Trader platform has a minimum $100/month charge
Limited eerie offerings
TD Ameritrade (thinkorswim)
- Account Minimum: $0
- Fees: Free stock, ETF, and per-leg options trading commissions in the U.S., as of October 3rd, 2019. $0.65 per selections contract.
New options traders can get started on TD Ameritrade’s website, and then grow into the astounding tools built into their thinkorswim platform. You’ll find educational content galore on both platforms, along with get along coaching and video updates. You can watch nine hours of video webcasts every trading day, much of which is loving to options, on TDAmeritradeNetwork.com. The TDA site offers basic education and on thinkorswim, you’ll find options-specific education to qualify you to trade assorted complex spreads. If you tick off the concepts that you want to learn, you’ll get a personalized education menu.
The thinkorswim platform has contrivances for selecting options strategies, assessing their risk, and rolling spreads quickly to future expiration dates.
The thinkorswim party line is best suited for more advanced options traders, with a variety of options selection tools and risk supervision. You can build your own technical studies from over 500 indicators in both the downloadable platform and its accompanying ambulatory app.
High-quality education, including live content on TDAmeritradeNetwork.com
Practice options trading strategies using a vocation simulator
thinkorswim platform has terrific tools for selecting options strategies
Streaming data available on all platforms
E*Patrons (Power E*TRADE)
- Account Minimum: $500
- Fees: No commission for stock/ETF trades. Options are $0.50-$0.65 per contract, depending on sell volume.
Options traders at E*TRADE saw their analytical and charting tools expand considerably after the callers’s acquisition of the OptionsHouse platform, which has been relaunched as Power E*TRADE. The platform includes streaming strategy elections chains, a fairly unique feature. It also has education content that helps you grow from newbie to pushed options trader.
If you set up an iron condor strategy, for example, you can define how wide you want the spread to be, and only the relevant information will stream. A performance risk tool lets you evaluate your risk on an individual holding or your undiminished portfolio, so you can run a stress test based on six preset risk ranges.
The charting capabilities of the Power E*TRADE platform are much updated over previous E*TRADE tools. You can use the Technical Insights feature to learn about technical analysis. TradeLab comprehends spectral analysis charts, which forecast how a spread might behave in the future. The LiveAction scanners give you an up-to-the-second disclose of potential trades, based on your criteria, in real time.
Though you have access to a wealth of analysis and fact-finding on the classic E*TRADE platform, you’ll have to toggle over to find those features.
Charles Schwab (StreetSmart planks)
- Account Minimum: $0
- Fees: Free stock, ETF and options trading commissions in the U.S., as of October 7th, 2019. $0.65 per options contract.
Schwab’s StreetSmart Edge, which you can access in a browser or by downloading to your desktop, has absorbed all of the instruments and content created by optionsXpress, which Schwab acquired in 2011.
The All-in-One Trade Ticket helps you build a spread by closing the type of trade you want to place from a drop-down menu and then picking the legs from the options sequence display. The Idea Hub lets you browse possible options contracts sorted by market activity or potential profitability in four options-specific groups: big movers, earnings, premium harvesting, and covered calls. You can analyze the idea presented and then click on Trade to stop up an order ticket.
This is a good platform for the emerging options trader, with plenty of support and education. The compensations are on the low side as well. For more sophisticated options traders, a tool shows how a hypothetical transaction would affect your scope balance.
The Idea Hub in the StreetSmart platforms displays actionable trading ideas
Options-oriented trading lessons that raise with you
A wide array of asset classes can be traded on any of the available platforms
The proliferation of platforms scatters privileges selection tools in different places
Customizing portfolio analysis pages to display options-specific performance is clumsy
Room rates are higher than average
- Account Minimum: $0
- Fees: $5.00 stock trades $1.00 options patrons
A platform built for frequent
What Kind of Options Trader Are You?
The first and most mighty piece of information to consider before selecting an options trading account is what kind of trader you are. What is your craft style and risk appetite? Which tools would you like to have handy?
Options are complex products to be aware of and trade. All of the brokers listed above allow customers to build complex options positions as a single order. Some agents, such as Vanguard and Robinhood, only allow one position per order, leaving it to the individual trader to place multiple hierarchies one at a time to create a combination position. Merrill Edge lets you place two-legged spreads, but anything more complex hand down require an additional order.
If you’re just getting started with options trading, the quality of education and help offered by your broker is important. Frequent traders and those who trade a large number of contracts will be more responsive to commissions and fees, so check out your prospective broker’s charges and make sure you understand them.
Investopedia is offered to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of appraising all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their stands, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, concentrating over 3,000 data points that we weighed into our star scoring system.
In addition, every middleman we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our proving. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
Our team of diligence experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing rostra for users at all levels. Click here to read our full methodology.
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