Next to active traders, there is arguably no customer more valuable to an online broker than an options trader. Options trades offer brokers much higher profit margins than stock trades, and, as a result, competition is fierce in attracting these clients. This type of market atmosphere is great for investors because with healthy competition comes product innovation and competitive pricing.
Best Options Trading Platforms
Here are the best options trading platforms, based on over 100 variables.
- E*TRADE - Best for options overall
- TradeStation - Low costs, great platform
- TD Ameritrade - Best options tools
- Interactive Brokers - Best for professionals
- Charles Schwab - Unique order types
Best for options overall - Open Account
Current Offer: $0 Commissions for online stock, ETF, & options trades. Join E*TRADE today!
Built as a web-based platform, Power E*TRADE innovates and delivers speed, ease of use, and the tools needed for traders to succeed. Once again, in our 2020 Review, Power E*TRADE won our award, "Best Web-Based Platform." E*TRADE also took our top spot for options trading. Read full review
Low costs, great platform - Open Account
Promo Offer: Commission-Free Trades on Stocks, ETFs & Options Trades
As a trading technology leader, TradeStation shines. Options trading is a breeze using OptionStation Pro, a built-in tool within the TradeStation desktop platform designed for streamlined trading and robust analysis. Options tool capabilities include custom grouping for current positions, streaming real-time greeks, and advanced position analysis, to name a few. Read full review
Best options tools - Open Account
Exclusive Offer: Get up to $375 and trade commission-free with TD Ameritrade.
Once again, for the ninth consecutive year, TD Ameritrade is number one for trading platforms and tools, thanks to desktop-based thinkorswim. Whether day trading, options trading, futures trading, or you are just a casual investor, thinkorswim is a winner. Read full review
Best for professionals - Open Account
Exclusive Offer: New clients that open an account today receive a special margin rate.
Trading tools within the Trader Workstation (TWS) platform are designed for professional options traders. From algo trading to Options Strategy Lab, Volatility Lab, Risk Navigator, Market Scanner, Strategy Builder, and Portfolio Builder, Interactive Brokers is built for professionals. Options commissions start at $.65 per contract with a $1.00 minimum and no maximum. Read full review
Unique order types - Open Account
Current Offer: $0 online stock, ETF, and options commissions at Schwab.
Schwab's flagship downloadable trading platform, StreetSmart Edge, provides most of the bells and whistles options traders and day traders need to succeed. For options traders, Schwab's All-in-one trade ticket, alongside the proprietary Walk Limit order type, are both excellent. Read full review
Options Trading Tools Comparison
|Option Chains - Streaming||Yes||Yes||Yes||Yes|
|Option Chains - Total Columns||30||37||35||32|
|Option Chains - Greeks||5||4||5||5|
|Option Chains - Quick Analysis||Yes||Yes||Yes||Yes|
|Option Analysis - P&L Charts||Yes||Yes||Yes||Yes|
|Option Probability Analysis||Yes||Yes||Yes||Yes|
|Option Probability Analysis Adv||Yes||Yes||Yes||Yes|
|Option Positions - Greeks||Yes||Yes||Yes||Yes|
|Option Positions - Adv Analysis||Yes||Yes||Yes||Yes|
|Option Positions - Rolling||Yes||Yes||Yes||Yes|
|Option Positions - Grouping||Yes||Yes||Yes||Yes|
Best Options Trading Tools
Platform wise, web-based Power E*TRADE offers all the tools an options trader could want, and displays them in magnificent form. Attention to detail, such as automatic spread groupings, effortless scanning through strategySEEK, and easy-to-understand risk/reward data through tradeLAB, make Power E*TRADE a truly unique experience.
Keeping the spotlight on excellent platforms and tools for options traders, TD Ameritrade's thinkorswim and TradeStation cannot be left out. Strategy Roller from thinkorswim enables clients to create custom rules and roll their existing options positions automatically. The number of settings and depth of customization available is impressive, and something we have come to expect from thinkorswim.
Not to be outdone, TradeStation's OptionsStation tool makes analyzing potential trades a breeze, and even goes as far as including 3D P&L charts. Investors note, however: Popcorn and 3D glasses are not required, and while visually appealing, we did not see any distinct advantage over the traditional 2D P&L chart.
If unique features and functionality matter to you, Charles Schwab offers the “Walk Limit” order type, which will "walk" your order to try to get the most favorable price within the National Best Bid or Offer (NBBO). The broker also offers Idea Hub, which uses targeted scans to break down options trade ideas visually.
For professionals, Interactive Brokers takes the crown. At Interactive Brokers, there is no base charge, and the per-contract rate is just $.70. Additional savings are also realized through more frequent trading. That said, the broker is built primarily for professional traders and requires a $100,000 minimum deposit for margin accounts. Lastly, its trading platform, Trader Workstation, is the most challenging platform to learn out of all the brokers we tested for our 2020 review.
There’s a healthy variety of reputable brokers to choose from in the world of options trading. At a minimum, investors should expect their broker to include scanning, P&L analysis, risk analysis, and easy-order management. Position management functionality and tying the experience together is where platforms such as Power E*TRADE and thinkorswim by TD Ameritrade distinguish themselves.
What is the best platform for trading options?
The best trading platform for options trading offers low costs, feature-rich trading tools, and robust research. Our all-around top pick in 2020 for options trading is Power E*TRADE. The web-based Power E*TRADE platform includes all the tools an options trader could want and displays them in magnificent form. My two favorites are strateySEEK and Snapshot Analysis.
What is a call option?
In its most basic form, a call option is used by investors who seek to place a bet that a stock will go UP in price. Buying a call option contract gives the owner the right (but not the obligation) to buy shares of stock at a pre-specified price for a pre-determined length of time. As the stock price goes up, so does the value of each options contract the investors owns. Each contract represents 100 shares of stock.
What is a put option?
In its most basic form, a put option is used by investors who seek to place a bet that a stock (or other security such as an ETF, index, commodity, or index) will go DOWN in price. Buying a put option gives the owner the right (but not the obligation) to sell shares of stock at a pre-specified price (strike price) before a preset date (expiration). The further the stock falls below the strike price, the more valuable each contract becomes.
What is the minimum amount required to trade options?
Each online broker requires a different minimum deposit to trade options. For most brokerages, the minimum deposit required is less than $1,000. To apply for options trading approval, investors fill out a short questionnaire within their brokerage account. Access to begin trading options can be granted immediately thereafter.
Is options trading risky?
Yes. Options trading is a form of leveraged investing. Any time an investor is using leverage to trade, they are taking on additional risk. Many times, this risk is unforeseen. With options, investors who buy a call or put risk the money they invested in the contract. However, when selling a call or put, if the trade isn’t protected (also known as going naked), then the investor is taking on significant risk. To protect investors, new investors are limited to basic, cash-secured options strategies only.
Options Trading Features
Ultimately, choosing an options brokers comes down to personal preference and weighing priorities, such as cost versus ease of use and tool selection.
On a feature by feature basis, all of our top five finishers this year offer the following features to their options trading customers.
|Has Education - Options||Provides a minimum of 10 educational pieces (articles, videos, archived webinars, or similar) with the primary subject being options. All content must be easily found within the website's Learning Center. Platform tutorials, FAQs, etc do NOT count.|
|Option Chains - Streaming Real-time||Option chains with streaming real-time data.|
|Option Chains - Greeks Viewable||When viewing an option chain, the total number of greeks that are available to be viewed as optional columns. Greeks = delta, gamma, theta, vega, rho.|
|Option Chains - Quick Analysis||The ability to jump straight from the option chain to a P&L chart or probability chart for deeper analysis. Viewing a summary P&L within the chain itself also qualifies.|
|Option Analysis - P&L Charts||When analyzing a theoretical option trade, a P&L chart is available.|
|Option Analysis - Probability Analysis||A basic probability calculator.|
|Option Analysis - Probability Analysis Adv||A tool to analyze a hypothetical option position. Displays a probability histogram / chart with optional customizations.|
|Option Positions - Greeks Viewable||View at least two different greeks for a currently open option position.|
|Option Positions - Greeks Viewable Streaming||View at least two different greeks for a currently open option position and have their values stream with real-time data.|
|Option Positions - Advanced Analysis||Ability to analyze an active option position and change at least two of the three following conditions - date, stock price, volatility - and assess what happens to the value of the position.|
|Option Positions - Rolling||Ability to pre-populate a trade ticket and seamlessly roll an option position to the next relative expiration.|
|Option Positions - Strategy Grouping||Ability to group current option positions by the underlying strategy: covered call, vertical, etc. Can be done manually by user or automatically by the platform.|
|Level 2 Quotes - Options||Level II options quotes available.|
|Screener - Options||Offers a options screener. Commonly referred to as a spread creation tool or similar.|
Explore our other online trading guides:
- Best Online Brokers for 2020
- Best Online Brokers for Beginners 2020
- Best Brokers for Day Trading 2020
- Best Brokers for Penny Stocks 2020
- Compare Online Brokers
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