Best Options Trading Platform
Not all options trading platforms are created equal. But which one is best for you? Read on to find out.
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Here are the top 7 best options trading platforms:
- Merrill Edge for beginners
- tastytrade for active options traders
- Thinkorswim for mobile trading
- SoFi Invest for low-cost trading
- E*Trade for options screeners
- Interactive Brokers for options analytics tools
- TradeStation for options strategy building
Trading options could be complex and risky. To make the most out of it, you need the right trading platform. With it, you'll have all the right tools you need to trade with confidence.
But how do you know which platform to choose?
In this guide, you'll discover the best platforms for options trading, everything they have to offer, and who each is best for. You'll also learn about their pros, cons, and costs.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
J.P. Morgan Self-Directed Investing - Get Up to $700
- Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- Get unlimited commission-free online stock, ETF, fixed income, and options trades when you open an account.
- $0 Online Commission trades
- Choose an account that's right for you: General Investing, Traditional IRA or Roth IRA.
- Access our secure, easy-to-use trading experience online or through the Chase Mobile® app.
- Our powerful tools and resources are built to help you take control of your investments.
INVESTMENT AND INSURANCE PRODUCTS ARE:
Invest and Earn Up to $3,500
Enroll your new or existing TradeStation account in this offer by using promo code TSTVAGFD on your new account application, requesting to enroll via telephone or with a TradeStation Representative, or completing the enrollment form. Within 45 days of account enrollment, fund your account with at least $5,000. Maintain at least $5,000 in your account for 270 calendar days. New assets will be aggregated during the 45-calendar day period following the enrollment date to determine the amount of your cash offer.
| New Assets | Cash Bonus |
|---|---|
| $5,000 - $24,999 | $150 |
| $25,000 – $99,999 | $300 |
| $100,000 – $249,999 | $500 |
| $250,000 – $499,999 | $1,000 |
| $500,000 – $999,999 | $2,000 |
| $1,000,000 or more | $3,500 |
7 Best Options Trading Platforms
The best options trading platform largely depends on your level of experience and the tools you need.
| Options Trading | Minimum Deposit | Virtual Trading | |
|---|---|---|---|
| Merrill Edge | $0 + $0.65 per contract | $0 | No |
| tastytrade | $1 per contract ($10 max per leg) | $0 | No |
| Charles Schwab | $0 + $0.65 per contract | $0 | Yes (thinkorswim platforms) |
| SoFi Invest | $0 ($5 exercise/assignment fee) | $0 | No |
| E*TRADE |
| $0 for self-directed brokerage accounts; Managed portfolios start at $500 minimum | Yes |
| Interactive Brokers | $0.15-$0.65 per contract ($1 minimum per order) | $0 | Yes |
| TradeStation | $0 Commission + $0.60 per contract | $0 | Yes |
Most people fail at options trading because of a lack of knowledge and a failure to backtest trading strategies. If you don't have a plan or the discipline for trading, it's likely that you won't be successful.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
J.P. Morgan Self-Directed Investing - Get Up to $700
- Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- Get unlimited commission-free online stock, ETF, fixed income, and options trades when you open an account.
- $0 Online Commission trades
- Choose an account that's right for you: General Investing, Traditional IRA or Roth IRA.
- Access our secure, easy-to-use trading experience online or through the Chase Mobile® app.
- Our powerful tools and resources are built to help you take control of your investments.
INVESTMENT AND INSURANCE PRODUCTS ARE:
Invest and Earn Up to $3,500
Enroll your new or existing TradeStation account in this offer by using promo code TSTVAGFD on your new account application, requesting to enroll via telephone or with a TradeStation Representative, or completing the enrollment form. Within 45 days of account enrollment, fund your account with at least $5,000. Maintain at least $5,000 in your account for 270 calendar days. New assets will be aggregated during the 45-calendar day period following the enrollment date to determine the amount of your cash offer.
| New Assets | Cash Bonus |
|---|---|
| $5,000 - $24,999 | $150 |
| $25,000 – $99,999 | $300 |
| $100,000 – $249,999 | $500 |
| $250,000 – $499,999 | $1,000 |
| $500,000 – $999,999 | $2,000 |
| $1,000,000 or more | $3,500 |
Merrill Edge: Best for Beginners
Merrill Edge is considered the best options trading platform for beginners because of its easy-to-navigate platform and comprehensive educational resources.
Merrill Edge offers webinars, articles, and videos that will teach you what options trading is about and how you can succeed in this kind of trading. The education it gives is specifically designed for beginners so they can have a solid grasp of options trading.
Why We Like It
It offers an Options Screener that helps you quickly see option opportunities. It allows you to screen assets based on a specified criteria.
It also has an Options Play that enables you to see a trend, specify your view, and execute option strategies after simply entering a symbol.
Commission and Fees:[1]
- Zero-commission for all option trades
- $0.65 per contract fee
- $0 exercise/assignment fee
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tastytrade: Best for Active Options Traders
tastytrade is best for active options traders because of its highly competitive trading commissions. The trading fees add up if you're an active trader, so it's good that tastytrade has zero to low commissions.
tastytrade has strong options analytics that includes:
- Greeks for multi-leg strategies
- Profitability graphs for options positions
- Easy order entry that automatically sets up the trade structure: makes it easy to change the expiration dates and strike prices
- Probabilities for the potential profitability of various options strategies
Why We Like It
This platform has excellent options trading tools, options-focused education, and live video materials. Its customer support also answers promptly.
It also offers a Follow Feed feature that allows you to follow the trades of experts on the platform. This is beneficial when you want to learn a new trading strategy.
Commission and Fees:[2]
- $1 to open options trades
- $0 to close trades
- $10 per leg maximum
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Thinkorswim: Best for Mobile Trading
Thinkorswim is an investment platform offered by Charles Schwab. Its mobile app has a simple and easy-to-use platform with a broad range of asset classes and excellent educational resources.
This is best for mobile traders because its app has all you need to be able to trade seamlessly on the go.
Why We Like It
The Thinkorswim mobile app offers watch lists and real-time data. It also supports charting and allows trading multi-leg options.
Additionally, you can backtest strategies and set automatic triggers when specific criteria are met.
Commission and Fees:[3]
- Zero-commission options trades
- $0.65 per contract fee
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Yes, it's possible to get rich with options trading. However, it can take time. Trading profits usually come once you establish a profitable strategy and your trading decisions are no longer affected by your emotions. Additionally, you'll need discipline and perseverance to continue through losses and failures.
SoFi Invest: Best for Low-Cost Trading
SoFi Invest is best for beginner traders who are looking for low-cost trading. It offers zero-commission options trades, no contract fees, and its asset offering focuses on low-cost ETFs.
SoFi also offers lots of educational materials that are beneficial to beginner traders. Its options trading materials teach you the basics of trading options, including some common strategies.
Why We Like It
It provides essential trading metrics such as data on your maximum profits, losses, and breakeven point.
Commission and Fees:[4]
- Zero-commission trades
- $5 exercise/assignment fee
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E*Trade: Best for Options Screeners
E*Trade offers options screeners that are highly customizable according to your needs. It also offers screeners for stocks, ETFs, and mutual funds.
This allows you to choose options strategies depending on your risk tolerance or market factors. This is particularly beneficial if you're just starting out and don't have a profitable strategy yet.
Why We Like It
This platform offers a Live Action tool that helps you identify unusual options and market volatility. This is a useful tool to know when to stay out of the market.
E*Trade also offers a wide range of educational materials and an easy-to-use platform that any beginner can pick up.
Commission and Fees:[5]
- $0.5-$0.65 options per contract fee
- $1.50 futures options per contract fee
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Interactive Brokers: Best for Options Analytics
Interactive Brokers (IBKR) offers the best options analytics tools that are more for advanced traders. This platform also provides ongoing improvements to its already excellent trading and analytics tools.
IBKR offers options spread templates so you can quickly compare strategies to find one that has the best risk/return profile. It also has indicators that can tell you if an options exercise would prove to be a good trade.
Why We Like It
Its Options Portfolio scans market data to help you identify low-cost options strategies that are in line with your trading goals.
In addition, it has tools that graph potential payouts on options strategies, tools to estimate the probability that an option would be profitable, and a write option tool that scans your stock positions.
Commission and Fees:[6]
- $0.15 to $0.65 per option contract ($1 minimum per order)
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TradeStation: Best for Options Strategy Building
TradeStation offers OptionStation Pro, a trading tool that helps options traders build profitable options trading strategies and identify option opportunities.
It also provides a visual representation of the strategy's risk/reward probability.
Why We Like It
This platform allows you to backtest strategies against historical market data so you can see its effectiveness before trading with real money.
Its Strategy Optimizer also allows you to identify the parameters that produce the best results for each strategy.
Commission and Fees:[7]
- Zero-commission options trades
- $0.60 options per contract fee
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Options trading isn't a gamble if you know what you're doing. If you know how to trade options, then you're using trade analysis methods to give you an idea of the market's potential movement. You act based on data and tested methodologies, not on gut feeling.
Other Options Trading Platforms to Consider
The following are other options trading platforms to consider:
Webull
Webull stands out for its zero-commission options trading. Traders can buy and sell options contracts without paying per-contract fees, which is a big advantage over other platforms that charge both commissions and contract fees.
Webull provides real-time market data, customizable charts, and technical indicators, which are helpful for making informed trading decisions. However, options-specific data like real-time greeks and more in-depth analytics may be somewhat limited compared to specialized platforms.
Charles Schwab
Charles Schwab caters to all levels of traders, from beginners to highly experienced options traders. It offers extensive educational resources.
Its web platform provides basic tools for placing options trades, suitable for casual and beginner traders. The interface is user-friendly, with access to options chains, order tickets, and account management features.
Charles Schwab charges $0.65 per contract fee on its option trades. While the platform doesn't charge a base commission for options trades, the per-contract fee is slightly higher compared to some other platforms.
Robinhood
Robinhood is a popular commission-free trading platform that caters primarily to beginner and casual investors.
One of Robinhood's most attractive features is zero commissions on options trades, with no per-contract fees, assignment, or exercise fees. This makes Robinhood one of the most cost-effective platforms for options trading, especially for those trading frequently or in small amounts.
The platform lacks advanced charting, real-time data, and analytics like the Greeks, making it less appealing for seasoned options traders.
What is Options Trading?
Options trading refers to the buying or selling of options at a chosen price and at a specified time in the future.
Options are a derivative contract that's based on an underlying security or asset. For example, stock options are derivatives whose value is based on stocks (the underlying asset).
These contracts give the buyer the right (not the obligation) to buy or sell the asset at a specific price and at a specific point in time.
Buyers are then charged with a certain amount called a premium. They exercise their right to buy or sell the asset if the market prices move in a favorable direction. Otherwise, they just let the option expire.
How to Choose the Best Options Trading Platforms
Choosing the best options trading platform largely depends on your level of trading experience or expertise. Here are some considerations:
- Commissions and fees
If you're an active trader, the best platform for you is one that offers zero-commission trades and zero-to-low options per contract fees. These fees can pile up if you trade frequently. Make sure you check the platform's commissions and fees before using it. - Comprehensive educational materials
If you're a beginner, choose a platform that offers comprehensive educational materials so you can have a solid understanding of options trading before risking real money.Choose a platform that offers a trading simulator or paper trading so you can practice and build your confidence before risking real money.
- Options trading tools
If you're an experienced trader, pick a platform that has the trading tools you need. If you want to test out a new strategy, choose one that offers strategy building or strategy optimizing features.
How to Start Trading Options
To start trading options, the first step is to open a brokerage account that supports options trading.
After selecting a broker, you'll provide personal and financial information, followed by completing an options approval process. The broker assigns a trading level based on your experience, which determines what strategies you can use (e.g., basic covered calls or advanced spreads).
Once approved, you can fund your account and begin trading.
For beginners, it's recommended to start with simple strategies like buying calls or puts and to familiarize yourself with the platform using features like paper trading if available.
As you gain confidence, you can explore more complex strategies and use tools like options chains, volatility data, and screeners to find opportunities.
Continuous learning is essential for successful options trading, so make use of your broker's educational resources, risk management tools, and market updates to refine your strategies over time.
You can trade options as often as you want, but the frequency depends on your account type and broker's rules. In a cash account, you can only trade options as often as you have enough settled cash to cover the trade. If you have a margin account, you can trade more frequently without waiting for funds to settle.
What the Experts Say
CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:
Frequently Asked Questions
- How much money do you need for options trading?
Brokers have different requirements, but most need an account size of $2,000 or less. Some brokers don't have a minimum deposit, so you can start trading with just a few hundred dollars. - How risky is options trading?
If you do your research, options trading isn't any riskier than trading stocks or bonds. But if you don't, you could lose the entire premium you paid. - How do calls and puts work?
A call option lets you buy a stock at a set price on a specific date, without any obligation. A put option gives you the right to sell a stock at a set price on a specific date, but you don't have to. - Do all brokers offer options trading?
Not all brokers offer options trading, so be sure to check for that when comparing them.
Methodology
The list above was chosen based on the platform's fees, trading tools, and educational materials. Trustworthy platforms with zero-commission and competitive options contract fees were selected.
Most of the platforms are also good for beginners. We picked those that offer comprehensive educational materials so you can have the guidance you need before you start testing trading strategies.
Finally, we chose platforms that offer strategy building or optimizing features so you can backtest and finetune the strategy that works for you.
Bottom Line
Options trading is more complex than trading stocks. It also carries more risk. This is why you need a good options trading platform. Pick one with all the tools and educational materials to help you build confidence when trading.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
J.P. Morgan Self-Directed Investing - Get Up to $700
- Get up to $700 when you open and fund a J.P. Morgan Self-Directed Investing account with qualifying new money.
- $700 when you fund with $250,000 or more
- $325 when you fund with $100,000-$249,999
- $150 when you fund with $25,000-$99,999
- $50 when you fund with $5,000-$24,999
- Get unlimited commission-free online stock, ETF, fixed income, and options trades when you open an account.
- $0 Online Commission trades
- Choose an account that's right for you: General Investing, Traditional IRA or Roth IRA.
- Access our secure, easy-to-use trading experience online or through the Chase Mobile® app.
- Our powerful tools and resources are built to help you take control of your investments.
INVESTMENT AND INSURANCE PRODUCTS ARE:
Invest and Earn Up to $3,500
Enroll your new or existing TradeStation account in this offer by using promo code TSTVAGFD on your new account application, requesting to enroll via telephone or with a TradeStation Representative, or completing the enrollment form. Within 45 days of account enrollment, fund your account with at least $5,000. Maintain at least $5,000 in your account for 270 calendar days. New assets will be aggregated during the 45-calendar day period following the enrollment date to determine the amount of your cash offer.
| New Assets | Cash Bonus |
|---|---|
| $5,000 - $24,999 | $150 |
| $25,000 – $99,999 | $300 |
| $100,000 – $249,999 | $500 |
| $250,000 – $499,999 | $1,000 |
| $500,000 – $999,999 | $2,000 |
| $1,000,000 or more | $3,500 |
If you're just starting out, make sure to focus on the educational materials and simulated trading. Taking the time to really learn the ropes could help you out in the future.
References
- ^ Merrill. Self-Directed trading fees & commissions, Retrieved 01/14/2024
- ^ tastytrade. Pricing, Retrieved 01/14/2024
- ^ Charles Schwab. Charles Schwab Pricing Guide for Individual Investors, Retrieved 01/14/2024
- ^ SoFi. What are the fees associated with options?, Retrieved 01/14/2024
- ^ E*TRADE. Pricing and Rates, Retrieved 01/14/2024
- ^ Interactive Brokers. IBKR Options Pricing, Retrieved 01/14/2024
- ^ TradeStation. Commission-Free and Innovative Pricing Plans, Retrieved 05/30/2024
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