For traders specifically looking to trade options, choosing the best online broker can be particularly crucial. Most major brokers have options trading capabilities, but not every platform is geared specifically for options trading.
In general, options trading is a very profitable offering for brokers, so there are plenty of great deals out there for traders. When it comes to the stock market, most people think no further than buying and selling individual stocks. However, an option is simply a contract to buy or sell a stock at a pre-negotiated price and by a certain date.
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:. 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. It takes a lot of hard work to consistently turn a profit trading options, and every cent spent on commissions and fees weighs on overall returns.
When it comes to minimizing option trading costs, Ally Invest is the best platform available. Ally invest also offers some of the lowest margin rates among major trading platforms at just 8.
TD Ameritrade and E-Trade charge traders 9. 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 option traders with another level of flexibility as well. 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. 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. However, it also offers volume-tiered pricing that varies depending on geographical region that can drop commissions as low as 25 cents per contract in the U.
OptionsHouse 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 OptionsHouse platform replace E-Trade Pro as the premium service, but for now, it is free for all E-Trade users. OptionsHouse 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 strategySEEK tool allows users to scan market data and identify potential trading strategies. E-Trade currently offers clients two free mobile apps. For advanced traders, the OptionsHouse app has a wide range of professional-grade trading tools which make complex options trading a breeze, including customizable options chains and 4-legged spreads.
Option trading can be intimidating and complicated for new traders. Fidelity also offers free webinars and online classes through its online learning center for traders that prefer a more structured educational environment. For a more personal touch, customers can attend seminars in person at more than branch locations explaining how to navigate the platform.
E-Trade let every trader know that options trading is a priority when it acquired OptionsHouse in Between the online OptionsHouse platform and the new OptionsHouse mobile app, E-trade offers traders two of the most comprehensive dedicated options trading platforms in the world.
Plus, option traders can rest assured that they are getting plenty of bang for their buck with OptionsHouse. This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
If investors are on the hunt for a bargain broker, Ally Invest could be the one. With low commissions across the board, Ally Invest formerly TradeKing stops potential investors in their tracks with its especially low mutual fund commissions.
E-Trade is best known for its user-friendly browser, desktop and mobile trading platforms and its extensive research and educational information. Fidelity has unmatched market research. The company uses the most providers to customize which research data is appropriate for the investor. Fidelity is best used for an experiecned trader who is willing to invest and make a minimum 36 trades per quarter.
Benzinga is a fast-growing, dynamic and innovative financial media outlet that empowers investors with high-quality, unique content. Login Email Password Forgot your password? Best Brokers for Options Traders. Wayne Duggan Contributor, Benzinga. Contents [ Hide ]. Open an account securely through Ally Investment's website.
Get started securely through TD Ameritrade's website. Pros Superior technology No account minimum balance Excellent customer support Premier data and news partnerships.
Cons Slightly higher commissions Can be for more advanced users. Get started securely through Ally Investment's website. Pros Volume discounts available Among the lowest fees in industry Good for every experience level Excellent customer service.
Get started securely through Interactive Brokers's website. Pros Interactive Brokers offers the lowest margin rates in the industry Low pay-per-share commissions on stock trades up to 1, shares and on options trades up to 20 contracts Vast order types options for professional traders. Get started securely through eTrade's website. Pros Extensive resources Full banking services Easy-to-use platforms. Get started securely through Fidelity Investments's website.
Current Promotion Commission-free trades good for 2 years. Beginner investors Advanced traders Investors who want portfolio-building advice. Active traders Beginners looking to start trading Low fees Penny stocks. Get started securely through Ally Investment's website More Details. Day traders Penny stock traders Forex traders. Get started securely through Interactive Brokers's website More Details.
Mobile traders Traders looking for research and data Investors looking for retirement planning guidance. Get started securely through eTrade's website More Details. Retirement investors Active traders Premium research Low fees No-transaction-fee mutual funds.
Get started securely through Fidelity Investments's website More Details.More...