9.68
/ 10
9.65
/ 10
9.63
/ 10
9.40
/ 10
9.35
/ 10
9.15
/ 10
9.03
/ 10
8.85
/ 10
8.83
/ 10
8.10
/ 10
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Options Contract Rate (active traders)
PreviousNext
5 Contracts
$7.45
$8.20
$10.70
$10.70
$8.20
$8.20
$8.20
$10.45
$7.50
$8.70
10 Contracts
$9.95
$11.45
$14.45
$14.45
$11.45
$11.45
$11.45
$13.95
$10.00
$12.45
50 Contracts
$29.95
$37.45
$44.45
$44.45
$37.45
$37.45
$37.45
$41.95
$30.00
$42.45
100 Contracts
$54.95
$69.95
$81.95
$81.95
$69.95
$69.95
$69.95
$76.95
$55.00
$79.95
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Fees & Commissions
PreviousNext
Average Trader's Yearly Cost
$84.15
$84.15
$118.15
$118.15
$84.15
$84.15
$84.15
$119.00
$85.00
$84.15
Online Stock Trades
$4.95
$4.95
$6.95
$6.95
$4.95
$4.95
$4.95
$6.95
$5.00
$4.95
Options Base Fee
$4.95
$4.95
$6.95
$6.95
$4.95
$4.95
$4.95
$6.95
$5.00
$4.95
Options Per Contract
$0.50
$0.65
$0.75
$0.75
$0.65
$0.65
$0.75
$0.70
$0.50
$0.75
10 Options Trades
$9.95
$11.45
$14.45
$14.45
$11.45
$11.45
$12.45
$13.95
$10.00
$12.45
Options Exercise & Assignment
$4.95
$7.95
$19.99
$19.99
$8.95
$9.95/$4.95
$0.00
$17.00
$14.95
$14.95
Broker-Assisted Trade Fee
$25.00
$32.95
$44.99
$25.00
$0.00
$20.00
$25.00
$32.00
$50.00
$19.95
Margin Rates
8.00% - 3.50%
8.825% - 4.00%
9.50% - 6.75%
9.25% - 5.75%
8.25% - 6.00%
9.25% - 4.50%
8.5% to 6%
8.25% - 5.50%
8.50% - 6.25%
8.25% - 4.5%
Minimum Investment
No Minimum
$2,500
No Minimum
$500
No Minimum
No Minimum
$1,000
$2,500
$5,000
No Minimum
Platform & Tools
PreviousNext
Platform Ease of Use
A+
A-
A
A
B+
A
A
A-
B+
C
Mobile App Functionality
A+
A+
A+
A+
B+
C
C
A
B+
C
Option Strategies
15
12
15
16
12
8
3
2
11
3
Analytic Charts
35
63
300+
69
39
27
34
29
26
31
Automated Trading
Forecasting
Risk-vs-Reward
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Education & Resources
PreviousNext
Investor Education
A-
A-
A-
A+
A-
B+
A-
A-
C
D+
User Training
A+
B-
A
A-
A-
A-
A
A+
A-
B-
Simulated Trading
Broker Support
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by

Online Options Trading Review

Why Online Options Trading?

OptionsHouse is the winner of our Top Ten Reviews Gold Award because it combines a simple yet powerful platform with low pricing and a wide range of analytics tools. The base fee for options trading is $4.95 with a per-contract fee of $0.50. If you’re just beginning to trade options, you can find webinars and blogs by experts. Experienced traders can use advanced options strategies offered through the platform to make more sophisticated trades.

Best for Beginning Options Traders

The winner of our Top Ten Reviews Silver Award is Fidelity. It offers a wide range of tools to help novice options traders get up to speed. Options trading is more complex than simple stock trading, and Fidelity provides new options traders with investing webinars, articles and courses specifically geared toward options trading. Fidelity also has information geared toward intermediate and advanced traders, so regardless of your experience level, you can find something to help you improve your strategy. Fidelity also offers competitive pricing, with an options base fee of $4.95 and a per-contract fee of $0.65.

Best Options Trading Platforms

TD Ameritrade, the winner of our Top Ten Reviews Bronze Award, has the most complete trading platform of any options broker we reviewed. With more than 300 different technical indicators, and 15 options strategies, analytically minded options traders will find this platform well suited for their trading needs. This broker also has one of the best mobile trading apps and offers forecasting and risk vs. reward tools. You can also take advantage of the paper money simulated trading account to test trades and strategies before trying them in the real market.

How We Ranked the Best Options Brokers

We started by looking for brokers that offer an online platform and a mobile app. Our reviewers were able to get access to full demo accounts of these trading platforms, which allowed us to use them the way an actual trader would. Cost is one of the first things options traders look for so we also compared the pricing, placing emphasis on options-related costs. We looked at the tools each broker includes with its platforms, as well as the training tools and educational resources they include.

What We Tested and What We Found

Our reviewers used the desktop platform and accompanying mobile app of each online broker. We had two reviewers test each platform, one who was more experienced and another who had never touched a trading platform before. Because the fees for options trading can be expensive, we placed a greater emphasis on the costs each broker charges. After testing was complete, our reviewers got together to compare these results. Here is what they found.

Costs:
While there used to be a wider range in pricing, many of the brokers in our reviews have recently lowered their prices. The average options commission has dropped more than a dollar, with many brokers offering trades for $4.95. In addition to this base commission, you’ll also be assessed a per-contract fee, which ranges between $.50 and $.75. This fee is charged for each contract (which represents 100 shares) you trade. So, if you trade 10 contracts, with a $.50 per-contract fee and a $4.95 commission, that trade will cost a total of $9.95. There is also an additional fee when your options contracts are assigned or exercised. Some brokers don’t charge this fee, and some charge the same rate as their commission fee. A few charge as much as $19.99. Remember though, each options contract represents 100 shares of the underlying stock, so when you finalize a trade, you’ll be paying for all the shares in the contracts you’ve bought.

Ease of Use:
When looking at each platform, we looked at how easy it was to place trades and monitor option chains. We looked for platforms that allow you to create alerts for various criteria, and not just simple price movement. The best platforms have tools to help you monitor when options are in the money and let you place trades directly from a watchlist. Platforms that scored well have simple, intuitive designs that are easy for traders of all levels to use. Platforms with poor grades aren’t as flexible; you may need to navigate through different windows to place trades, something other platforms let you do through a simple dropdown.

Mobile Apps:
We looked at the mobile apps offered by each options broker. You’ll want a mobile app that works as an extension of the desktop platform, allowing you to track the options you’re trading, create watchlists and place orders. The best apps include analytic tools, while low-scoring apps don’t allow you to create alerts or don’t sync with the main account.

Trading Tools:
Another important consideration when choosing an options broker is the tools provided to help traders make decisions. Options traders will find these tools particularly useful as they can provide analysis of a stock’s performance, which can influence your decision to purchase an option on that security. Other useful tools include forecasting and risk vs. rewards screeners.

Options Strategies:
We also looked at the options strategies offered by each brokerage. Strategies include Iron Butterfly, Condor, Straddles and others and allow traders to account for unexpected price swings or maximize profits. Some brokers offer only a few strategies, but the best offer up to 16 different options strategies, with tools to customize them further. You can learn more about options strategies here.

Is Options Trading Risky?

Often advice about options trading comes with warnings about how its riskier than other types of trading. But the truth is more nuanced. All investments come with some aspects of risk. And options are no different. With any kind of investment, you’re susceptible to unforeseen economic factors that can’t be planned for. Still, options aren’t inherently riskier than stock trading. In fact, a well-structured options strategy can account for risk in ways a standard stock trade can’t. If you feel safe with stocks because you’ve placed stops on them, be aware that there are some cases where even a stop-loss won’t be effective in preventing losses, especially in highly volatile markets. Options give you more flexibility when hedging, because it is easier to occupy both long and short positions on the same stock.

Perhaps the biggest risk of trading options lies in their complexity. Options aren’t as simple as basic stock trading, and advanced strategies require even more skill to implement. Most of the brokers we reviewed offer training courses for options traders of all levels. These include webinars, blogs and articles. We also recommend looking for a broker that offers a simulator, as this is a great way to learn how to use the trading platform as well as test trading strategies. If you’re new to options trading, using a simulator first is a great way to learn the intricacies of options trading without risking real money.

What Are the Benefits of Options Trading?

Options trading is another way for you to maximize your investment dollar. There are many ways to use options to your advantage – here are a few of them.

  • Cost Efficiency: Options give you the opportunity to take positions on a stock for considerably less than it would cost to buy the shares outright. By doing this you can control the same amount of stock for less money. Using options in this way is a form of leverage, and its call allow you to trade high-priced stocks and increase your profits when the stock moves up.
  • Versatility: There’s an options strategy that fits any kind of market situation, which means that a savvy trader can find opportunity even when there doesn’t seem to be any. This is an advantage over simple stock trading, which only benefits you when stocks move up or down. With options you can also benefit from quiet markets. Options are available for more than just stocks too. You can trade options on indices, ETFs and even forex.
  • Control: Trading options gives you greater control over the risk of your investments. You can purchase put options on stock you hold to hedge against losses. Using options can protect your portfolio from adverse market conditions.

Drawbacks of Options Trading

All forms of investments have their drawbacks, and options are no exception. Here are a few things to be aware of when trading options.

  • Difficulty: One of the biggest hurdles to trading options is learning how to do it effectively. There’s more of a learning curve than there is with many types of investments. That’s not to say it’s impossible, just that it takes time and a beginner can easily make a wrong move and lose their investment.
  • Time Decay: Unlike a standard stock trade, you can only hold an option for a finite amount of time. All options have an expiration date and the value of an option can decrease as it approaches its expiration and it becomes increasingly likely that it won’t be in the money. Because of this, options require more attention than other assets.
  • High Commissions: While an options trade can allow you to hold positions that are worth more than you’ve invested, there are also more fees associated with them. In addition to a base fee, you’ll also pay a per-contract fee and an additional fee for exercising or assigning an options contract before it expires.

Other Recommendations

Here are a few other options trading platforms with features that stood out to our reviewers.

Best for Investor Education

E*TRADE Financial offers some of the best resources to learn about options trading. These include blogs, articles and webinars. The entire archive is made available, so you will be able to view past seminars on a range of subjects. This broker also provides a training course broken into six different topics with quizzes to help you test your knowledge.

Best for Simulated Trading

OptionsXpress includes a simulated trading account when you sign up. This is particularly useful for options trading, since there’s a higher learning curve with options – testing the platform and different strategies without worrying about losing any actual money can save you significant heartache down the line. OptionsXpress provides you with $25,000 in virtual cash to trade with.

Options trading may be tricky to master, but it gives investors the potential to mitigate risk and maximize their capital. We’ve tested each of these broker’s trading platforms and compared their costs to create this ranking of the top 10 options brokers.