Best brokerage for options kong

The Best Options Broker. Latest Update October 28, 2016. The best options trading platform isn’t going to be an afterthought tacked on to an existing suite of products: it should be robust and easy to use. Beginners need enough support to learn the ropes and experienced traders are after low fees and powerful tools. We signed up, assessed the fees, took the tools for a spin, and narrowed it down to three top picks. The one that's best for you depends on what you’re after. Tons of online and in-person support, plus a practice platform that lets you try everything out with “paperMoney.” The downside? Higher fees. Rock-bottom pricing, but no research or method support. Unrivaled tools & research with pricing that favors active traders. There are a lot of brokers that are perfectly capable of trading options — nearly all of the big (read: old-school) names have an options platform integrated into their suite of offerings. But for those looking to really dive in, whether as a beginner just starting out or an active trader looking to level up, the best platform won’t be something that’s just tacked on. How We Found the Best Options Broker. To find the brokers that cater specifically to options, we looked at 36 choices and analyzed their products. We prioritized the most important aspects: Cost matters a lot when it comes to trading options.

It’s the very nature: part of the appeal of options is that the returns can be major even if you don’t fork over a lot of cash up front, and many traders use options as a cheaper alternative to going long on a high-priced stock. Fees can add up and even wipe out the profits from any profitable trades. Granted, slightly higher fees may be worth it if a broker can provide other perks (say, excellent resources and education for beginners), but we wanted all our picks to have competitive pricing. We also wanted to avoid minimum balance requirements, or a set number of trades per month. Easy-to-use interfaces are a make-or-break for most platforms. The price of options contracts can swing a lot over the course of a trading day poking around a clunky options chain can literally cost you. Education and resources are important, especially for investors who are getting their feet wet. Sure you’ve got a handle on multi-leg options trades, but do you know when it’s the right time for a bull call spread? What’s an iron butterfly? Not all traders will need hand-holding, but we wanted to find at least one excellent options broker we could recommend to newcomers.

Flexibility can be interpreted a few ways. For us, it meant the robustness of the platform (could we research and purchase stocks and ETFs in addition to options?) its flexibility (could we streamline a multi-leg options trade, or did we have to input them all separately?) and whether or not we could customize it to our liking. It was quick work to eliminate the most expensive platforms, as well as the ones that had absolutely no resources or reports. To test ease of use and flexibility, we signed up for accounts and simulated making trades on all the rest. Three brokers rose to the top, and each brings something unique to the table. Our Picks for Best Options Broker. TD Ameritrade Higher fees on an ultra-easy platform. Plus, tons of support and education. TD Ameritrade is one of the largest online brokerages in the market today, with over 7 million funded customer accounts and over $700 billion in total client assets, and despite its slightly higher prices, it provides the best platform for a beginner trading any product, options or otherwise.

For more novice traders, the platform supports the jump from trading stocks with the funds in an IRA to more sophisticated products like options. It’s robust, plus it has the customer service and educational resources to make the transition. There are webinars and hours of on-demand videos that’ll teach you about options strategies and how to literally execute those strategies on the platform. TD Ameritrade is a full-service broker, and that full service (we’re talking 247 customer service and 100 branches for face-to-face consultations) does come with higher fees. Barron’s agrees, awarding it “best platform for novices” five years running. We can anticipate its service only getting better too. In 2016, TD Ameritrade started the process of acquiring Scottrade, another platform known for it’s in-person customer service offerings. In fact, TD Ameritrade is one of the best platforms for all levels of investors, serving up two discrete products: thinkorswim and Trade Architect. Thinksorswim is a desktop platform designed for an all-around trading experience: charts with real-time data, news tickers, 300-plus technical studies, alerts and alarms, heat mapping, options screeners, securities scanner, and more, all accessible in a single click. It’s definitely for seasoned investors — newcomers will likely be overwhelmed — but it’s worth bringing up because a virtual playspace called paperMoney allows even total novices to cut their teeth without risking even a single penny.

We recommend beginners stick to TD Ameritrade’s web-based platform Trade Architect. It is nowhere near as robust as thinkorswim (and has nowhere near as jazzy a name), but it provides everything a new investor would want and it’s ultra-easy to use. It’s not bogged down with all the bells and whistles and live-streaming CNBC. Tabs at the top are simply categorized under jargon-free headings: account overview, watch lists, alarms, idea generators, and heat maps. Unlike thinkorswim, the platform is customizable. If you want more widgets, like say, additional stock tickers or video, they’re there for the adding. If beginner investors use TD Ameritrade’s education library to learn the ropes, practice using paperMoney in thinkorswim, and then easily execute trades with Trade Architect, the slightly higher fee may suddenly seem worth it. OptionsHouse The lowest fees and no minimum balance requirements. OptionsHouse isn’t the most recognizable name in the industry, and that’s probably because this online broker hasn’t pursued an aggressive marketing campaign like some of the other brokers out there (remember E*Trade’s old Super Bowl ads?). The company was founded in 2005 and was established to specifically provide options traders who demanded lower fees from the then burgeoning online brokerage industry. Those low fees are still what makes OptionsHouse so popular. There’s a $0 minimum deposit to join and options trade at $4.95 + $0.50contract (stocks trade at a flat $4.95 fee). This is the lowest price in the industry. Only TradeKing comes close — matching that $4.95 options base fee, but charging $5 more than OptionsHouse for the exercise fee. The OptionsHouse platform is striking if a bit chaotic — there are buttons, tabs, and menus all over the place.

It’s intuitive and there’s a tutorial to walk you through, but to a beginner it might seem more like sitting in front of the controls of an aircraft than is comfortable. Beginners take note: OptionsHouse does have a virtual platform that’s great for practicing. And, the tradeLAB makes dissecting options spreads simple — the green smiley face is good the red frown is no good. What you won’t get for those low fees is method and research: OptionsHouse has about 30 technical studies TD Ameritrade has 300. It’s important to note that E*Trade purchased OptionsHouse for a whopping $725 million in 2016. It is still unclear how any pricing structures or account features and perks will change after the sale is completed, but an OptionsHouse blog post suggests that E*Trade’s tools and services will become available after the platforms merge. Best Tools and Research. optionsXpress A one-stop shop within a major firm, with an options-native platform. OptionsXpress was purchased by Charles Schwab back in 2011 to enhance Schwab’s competitive edge in options trading. The result is a one-stop shop with an options-native platform that’s pretty whiz-bang. Everything happens through the desktop platform, Xtend, but all the trading tools are also on the optionsXpress web platform. It’s fully customizable, and it’s easy to find real-time quotes and market data, news and reports, and company background information. The Idea Hub scans the market for volatility, earnings, and income-based strategies and offers new trade ideas. With Walk Limit, you can set a few parameters, and it will scan updated market data and re-create an order you may have made at a higher price in the past.

Sign up for the Xpresso newsletter and you’ll get a daily email alerting you to the day’s risks and opportunities. Add to that an impressive library of educational resources, as well as access to all of Charles Schwab’s investment research (and free access to its seminars and meetings at local branches), and a virtual trading platform that helps beginner investors practice all types of trading with $25,000 in fake cash. If you need help from a broker — to calm your first-timer nerves or to walk you through a complex method — they’re ready to help and totally free, too. The standard rates are steep, so we don’t recommend optionsXpress to the casual trader. Make more than 35 trades a quarter and you’ll click into “Active Trader” status and your fees will go down. Trade in volumes and there’s another discount trade contracts under a nickel and there’s another discount. This is all to say the price structure favors the active. And while optionsXpress has a $0 account minimum and does not charge any annual or inactivity fees, if you leave, there is a $60 full outgoing transfer fee. The Best Options Broker at a Glance. Options are contracts that allow an investor the right, but not the obligation, to buy or sell an asset on or before a set date. Here’s an example: Say you are a buyer looking for a specific vintage car and you end up finding one you just have to have. When you find it, however, you know you won’t have any cash to buy it for another six months.

You then negotiate with the owner to give you an option to buy the car in six months for a specific amount. If the owner agrees, you pay him a percentage up front for that option. The same scenario applies in the stock market – just for financial assets instead of vintage cars. If you were trading stocks, you’d be actually buying the car. Or, rather, not buying it since you didn’t have the money. Because options are simply options and not promises, if something happened to that vintage car — say it was sitting in the driveway and a tree fell on it — you wouldn’t have to buy it. You’d still be out the price you paid for the options contract, but at least you wouldn’t have lost all that money on a now-worthless pile of steel. And, if in those same six months something happens that makes the car go up in value, well, hey, you’ve already locked in your price. If you’re new, you should prize learning tools. If you’re experienced, you’ll need to choose between low cost or amazing tools. No matter what, options trading shouldn’t be an afterthought tacked onto your platform. Best for Beginners. TD Ameritrade TD Ameritrade fees might be higher, but sometimes you get what you pay for. Consider your entire investment method.

Don’t make your final decision solely based on options trading if it’s not the only kind of trading you’ll be doing. These online brokerage firms all offer a variety of investment opportunities. You may want to take into account their extra perks or the price of their mutual funds, for example. Know your expirations. Options are contracts that expire if they’re not acted on and an expired contract is worthless. Make sure you understand your expirations and set reminders using your broker’s platform, or on your calendar if you’re not trading every day. We find the best of everything. How? We start with the world. We narrow down our list with expert insight and cut anything that doesn't meet our standards.

We hand-test the finalists. Then, we name our top picks. Best Option Brokers. Choosing which broker to use when trading options is without doubt one of the single most important decisions you will ever need to make in your trading career. Using a good broker can save you money, increase your profitability, save you time, help you find trading opportunities, and it will generally improve your overall trading experience. The following is a list of the overall best online brokers that we recommend. If you are looking to sign up with a broker now, then we would advise that you take a look at any of the below online brokers. For advice on choosing an options broker, plus further recommendations in specific categories, please see read on. Competitive Commission Structure Easy to Use Platform for Traders Allows for a Fully Customizable Experience. Competitive Fees Interaction with a Community of Traders Educational Resources for Beginners. One of the Best For Trading Features Top of the Line Trading Platform Extensive Customization Available.

You'll see from the above table that we provide reviews of the brokers that we recommend. For a list of all our reviews, plus information on exactly how we go about reviewing brokers, please visit this page. These reviews can help you make a decision about which of our recommendations is the right one for you. Despite the importance of choosing a broker carefully, many traders sign up with any old broker and simply join the first one they come across or the one that offers the best sign up incentive. Not putting any thought into what broker to use is a big mistake because, this really is a decision that is well worth spending some time on. If you are lucky enough to know an experienced trader that you trust then asking them which broker they use is a good way to find a decent broker, but that isn't a course of action that is available to everyone. Alternatively, you could try out a range of different brokers, compare them, and decide which one is best for you. However, this would be pretty time consuming. We have produced this section specifically to help you choose a broker. As well as the list of our top rated online brokers above, we have also produced a number of other lists. Each one of these contains a number of recommended online brokers that are particularly suitable for a specific purpose. You can see each of the broker categories that we cover linked over to the right. We have also provided some brief details about each category further down this page. Full Service Brokers vs. Discount Brokers.

The first page in our section on the best options brokers is a comparison between the two main types of brokers: full service brokers and discount brokers. The distinction between the two is quite important to understand, as the services offered by the two is substantially different. In very basic terms, a full service broker will provide clients with advice and guidance in addition to executing orders as instructed while a discount broker will simply carry out orders on behalf on their clients. Both types have their advantages, and we explain more on the following page: Full Service Brokers vs Discount Brokers. Best Brokers For Beginner & Small Traders. When you first begin trading, the chances are that you will be starting out with a relatively small amount of capital, and indeed you may be planning to only ever make small trades. Beginners and those trading with a low budget should be looking for fairly specific attributes before signing up with a broker. An appropriate commission structure and low minimums for both the size of your deposits and value of your trades is essential. Any sign up incentives being offered could also be significant too. If you are a beginner when it comes to options trading we suggest taking a look at what we have found to be the best brokers for people just getting started.

Best Brokers For Stock Options. As you probably know, contracts can be based on a variety of different underlying securities which give you many choices. Probably the most commonly traded are stock options those contracts where the underlying security are stocks in publically listed companies. It isn't particularly difficult to find brokers that are suitable for trading stock options, but it's still important to choose your broker wisely. If you are planning on trading mostly stock options, then please visit the following page for relevant recommendations. These all do an excellent job when it comes to trading stock options. Best Brokers For Forex Options. Forex options are contracts where the underlying security is foreign currencies. These are also very commonly traded, so finding an broker where you can trade forex options is not too much of a challenge. However, there are certain brokers that particularly stand out and that we believe are worthy of our recommendation. It's very important to find a forex broker that can meet your needs. For a complete list of these recommended brokers and more details on what you should be looking for when deciding where to sign up, please visit the following page. Best Brokers For Binary Options. Binary options are a unique form of contract that work a little differently to most others (please see our page on Binary Options for more details) and they are ignored by many traders as they often perceived to be a bit more complicated than the more standard type of option.

In fact, the basic principle of binary options is relatively straightforward and trading binary options is becoming increasingly more popular among traders. Not all brokers will deal with binary options, but for a list of recommended brokers that do please visit the following page. Best Brokers For OTC Options. OTC options are those contracts that aren't listed on a public trading exchange but are instead traded over the counter. Those options tend to be highly customized contracts that have complicated terms that include many of the exotic options that exist. Because OTC options are not traded on the public exchanges they are not generally as accessible to the public and are more typically traded between large financial institutions. Many traders do like to trade OTC options though, in which case it's important to use a broker that is suitable for the purpose. Please visit the following page for recommended brokers in this category. Best Brokers For Active Traders. Traders that use active trading styles, such as the day trading style, typically make a large number of transactions on a daily basis. As such, one of the most important attributes that active traders need to look for when choosing a broker is a commission structure that is very competitive and ideally provides for a discount when making a lot of trades. However this isn't the only consideration that active traders need to take into account and choosing a broker purely based on the commissions charged is rarely a good idea. For more advice on this, along with recommendations of suitable services, please visit the following page.

Best Brokers For Auto Trading. An increasingly popular way to try and profit from options is by using auto trading services which basically involve a trader signing up with an organization that will find opportunities for trading and then automatically place the relevant orders with the traderЂ™s broker. There are a number of services around and although they aren't necessarily the ideal way to trade, they can potentially be profitable. One of the biggest problems facing traders that wish to use auto trading services is that not all brokers allow it. For a list of the top places that do, please visit the following page. Brokers with Best Trading Platforms. The quality of the trading platform is something that many traders overlook when choosing an online broker, but it really is something that is very important for anyone that is trading options. A decent platform should be well designed with a user-friendly interface as brokers that make it easy to place orders will generally enhance your overall trading experience. This isn't something that should be ignored if you are going to be spending any sustained length of time trading options each day. For a list of recommended brokers that meet these criteria, please visit the following page. Best Options Trading Brokers and Platforms. NerdWallet offers financial tools and advice to help people understand their options and make the best possible decisions.

The guidance we offer and info we provide are deeply researched, objective and independent. We spent over 300 hours reviewing the top online brokers before selecting the best for our readers. And to help you find the one that’s best for you, we’ve highlighted their pros, cons and current offers. Who is the best options broker today? The answer depends on whom you ask and what they value. For some investors, the best broker for trading options is the one with the cheapest commissions. Others prioritize trading tools, platform design, research, customer service or all of the above. While most of the brokers on our best-of list below would be a good, all-encompassing choice for many investors, we’ve also highlighted the standout candidates in specific areas that matter most to options traders. Unsure what you’re looking for? See how to choose an options broker for more on what can make or break an options trading experience.

Summary: Best online stock brokers for options trading. Best for low-cost. Best options trading platform. Best for research and education. Best overall for options trading. Our top picks cover all the option trader needs — access to high-quality research, analytical tools, a user-friendly platform — at reasonable prices. TD Ameritrade and Interactive Brokers earn high marks for options investors for their advanced trading platforms, deep bench of research and tools, plus their high-caliber options trading capabilities. TD Ameritrade handily serves option traders no matter where they are on the learning curve. The broker’s thinkorswim platform offers a robust options trading experience for active investors seeking professional-grade tools to identify trading opportunities, analyze potential risks and rewards, test trade strategies and quickly place even the most complex options trades. The broker’s web-based Trade Architect platform is for investors just getting into options or those who don’t require a high-octane platform. Its stripped-down, easy-to-use interface won’t overwhelm newbies. And although Trade Architect isn’t as fully stocked with tools and data as thinkorswim, it’s no slouch, either. Intermediate investors will find advanced features like a marketoptions heat map, screening and tradefinder tools, and streaming news.

Get details in our TD Ameritrade review. For cost-conscious, active options traders looking for low costs and a platform with a lot more meat on its bones, Interactive Brokers may be more your style. Interactive Brokers charges just 70 cents per contract with no base fee ($1 minimum order), plus discounts for larger volumes, if you can manage the $10,000 account minimum. Its Trader Workstation platform (with an options method lab) is considered one of the best and most sophisticated around. But watch other fees to ensure that the lower commissions pay off. Both brokers allow prospective clients to test-drive the goods without putting any real money on the line. TD Ameritrade offers a paperMoney virtual trading account to test out the thinkorswim platform. At Interactive Brokers, once customers open a real account (which has a $10,000 minimum funding requirement), they can set up a paper trading account that offers them hands-on practice using IB’s Trader Workstation platform and tools. Best brokers for low-cost options trading. These brokers offer competitively priced options trading commissions and have eliminated or dramatically capped minimum trading fees.

In early 2017 most of the mainstream online brokers slashed commissions to levels once reserved for their deep-discount peers. That doesn’t mean that they’re the best deal in town for every investor. For active options traders, eOption earns five stars from NerdWallet for its low options trade commissions. The company charges a fixed $3 base plus 15 cents per contract. Another plus: eOption is known for having some of the lowest margin rates available. Although eOption charges a $50 annual inactivity fee on accounts that have placed fewer than two trades in the past 12 months or have less than $10,000 in credit or debit balances, the minimum trade workaround isn’t onerous, even for infrequent traders. Charles Schwab’s trade commission of $4.95 base rate plus 65 cents per contract puts it within spitting distance of deep-discount peers. Schwab recently fully took over the old OptionsXpress and incorporated that broker’s options experience into its own platform, with both web-based and mobile functionality. Commissions aren’t the only costs associated with trading options. Platform, data and other fees can quickly cancel out what you save on commissions. See our full reviews of Charles Schwab and eOption for details on what they offer. For those simply looking for a cheap way to execute options trades, Charles Schwab and eOption get the job done. Best options trading platforms. These brokers offer some of the most powerful trading platforms available for a reasonable price.

Judging a broker’s trading platform by the number of features it offers is like buying a car based solely on what you read in the dealer brochure. While all investors have their must-have features, what’s more important is how the platform feels when it’s in their hands. The trading platforms at Ally Invest and TradeStation offer a wide variety of analytical tools, provide stable and speedy trade execution, and allow investors to customize the tools and design to best suit their needs. Unlike TradeStation, Ally Invest (formerly TradeKing) is technically a deep discount broker as reflected in its commissions (options traders pay a $4.95 base plus 65 cents per contract with only one base charge per spread), $0 account minimum and free access to research and data. Frequent traders (those who place 30 or more trades per quarter or who carry a balance of $100,000 or more) pay a discounted $3.95 base and 50 cents per contract. But don’t be fooled by the lower prices: Customers get a lot of platform power for free. Ally is suitable for newer options investors. The browser-based platform resembles the offerings of its pricier competitors and comes with free options trading tools for screening and advanced charting. Navigation is easy and streamlined. Customers can create a custom dashboard with movable modules with the data and features they want to use. The setup extends to what users see across all devices, including mobile and tablet.

TradeStation is best left to more experienced, tech-savvy investors who want to experience options trading using the same tools as pro traders. The broker provides all the tools needed to design, test-drive, monitor, automate and speedily execute the most complex trades via direct-market access (no pesky middleman to slow down the process). Its OptionsStation Pro platform is fully integrated into TradeStation’s regular trading platform. An added bonus is the broker’s active investor forums, where traders discuss ideas, ask questions and get help. Access to all of TradeStation’s bells and whistles used to come at a steep $99.95 monthly platform fee for those who didn’t meet account balance or trading activity minimums. But in March 2017 TradeStation eliminated the service fee, lowered its trade commissions for stocks and options and tossed in free real-time market data and free access to its market-monitoring and portfolio-level back-testing tools. Educational tools and platform tutorials are plentiful, which is a plus: Because of the sophisticated nature of the platform, it may require some time to become familiar with all that it offers. See more in our TradeStation review. Best research and options trading education. Both offer extensive research and data for free, as well as live classes and webinars for beginning and advanced options traders. If you’re new to options trading or want to expand your trading strategies, a broker that devotes its resources to research and customer education is a must. Because Schwab and Fidelity each have offices across the country in addition to their online options education libraries, they’re able to offer in-person guidance and free seminars on how to trade options, as well as one-on-one guidance on using the tools each platform offers.

Fidelity’s constantly refreshed library draws from more than 20 providers, including Recognia, Ned Davis, S&P Capital IQ and McLean Capital Management. The full suite is available to customers when they sign into the broker’s web-based platform. And you don’t have to stop digging when you’re away from your computer: Fidelity has a strong mobile app that lets customers access the company’s full suite of research through a mobile browser. Charles Schwab’s options trading capabilities and lineup of trading data and research got a big boost as the company integrated its purchase of OptionsXpress. In October Schwab re-launched its online platform under the StreetSmart name, with both web-based and mobile functionality, though for now only former OptionsXpress clients have access to the new platform. In the first quarter of 2018, Schwab will begin rolling out the new platform to all clients. While the platform name is changing, Schwab still provides a fully realized suite of offerings for options traders, including trade assessment tools, customizable screeners, access to Schwab analyst options-market commentary, live online webinars and pre-recorded seminars. Best brokers for beginner options investors. These brokers provide ideal conditions (educational resources, user-friendly platforms, customer support and low minimums) for investors just learning the options trading ropes. TD Ameritrade — one of our top overall brokers — ranked highest in this category, too. But since there are many types of beginners with many different preferences, instead of highlighting the category champions we’ve focused on brokers that are excellent candidates in three key areas: Low minimum opening balance requirements.

Ally Invest, TD Ameritrade, Merrill Edge: If you’re not yet ready to devote a lot of your capital to options trading, you don’t want to tie up much in an account to meet the minimum. Many of the brokers on our list require no money to open an account. However, industry regulations require that traders maintain a $2,000 minimum to trade options. Strong customer support. Scottrade and TD Ameritrade: On-call help is particularly handy when starting out. One way to test a broker’s level of service is to contact the company with any questions you have about its option trading offerings before you even open an account. Scottrade is known for its standout customer service and huge physical presence of 500 branches. So is TD Ameritrade, with around-the-clock phone and email support and 100 branches where clients can attend seminars and meet with investment associates. At the end of 2017, TD’s acquisition of Scottrade will be complete, increasing each broker’s ability to serve clients. User-friendly platforms.

Ally, Charles Schwab and TD Ameritrade: There’s nothing better than test-driving a broker’s platform before you commit. Check to see if the broker you’re considering offers paper trading (virtual trading on a platform that mimics the real deal) or contact customer service to see if they will set you up with a demo account. As for brokers discussed in this review, Ally Invest’s browser-based platform is intuitive and easy to customize. And both Charles Schwab and TD Ameritrade have multiple platforms customers can use to start learning the ropes, then graduate to more sophisticated tools and trades if desired. Best options trading brokers: summary. Updated June 30, 2017. Disclaimer: NerdWallet has entered into referral and advertising arrangements with certain broker-dealers under which we receive compensation (in the form of flat fees per qualifying action) when you click on links to our partner broker-dealers andor submit an application or get approved for a brokerage account. At times, we may receive incentives (such as an increase in the flat fee) depending on how many users click on links to the broker-dealer and complete a qualifying action. Study: Best Brokerage for Options - OptionsHouse vs TradeKing vs OptionsXpress. Options trading is not an advanced investment method reserved for the most experienced of traders and certain undomesticated canines of Wall Street.

When used correctly, options can help add flexibility to an investor's portfolio and offer some protection when the market goes down. Of course, greater reward mean greater risk, and options trading is not recommended for the first-time investor. But if you’re already comfortable investing with stocks, then you may want to consider making options a part of your portfolio. We’ll explain a bit below before getting into the details of three popular options brokerages. When you buy an option, you’re buying a contract that grants you the right to buy (or sell) a stock at some future date for a specific price - but you don’t own it. So that means you don't have voting rights or access to dividends as you would with a stock. Typically, one option contract equals 100 shares of the underlying security. The two most basic types are a call option, which means you plan to buy shares, or a put option, which means you plan to sell shares. Options allow investors to gain a significant amount of shares in a company for a fraction of the price. For example, you think the price of a stock is going to rise from $50 to $60. You can buy a call option with a strike price of $55. If the stock rose to $60, that would allow you to buy the stock at $55, netting you a $5 profit on each share minus the option premium. One of the biggest negatives of options are the fees. You pay an amount for the option premium, but there are usually other trading costs as well. There is the chance that your option will expire worthless and you will lose the premium. Those losses can hurt your profits.

To help you decide whether options trading is right for you, CreditDonkey has reviewed three of the top online brokers for options — OptionsHouse, TradeKing (now Ally Invest) and OptionsXpress — to see how they compare. Here are the main factors we considered: Trading Platform & Research. We rated each brokerage on a 1-5 scale, with 5 meaning it has superior service and breadth of (excuse the pun) options in that area. As with any investment, fees and commissions should be a major factor in deciding which options provider to use. You want to make sure that your investment method pays off for you and not necessarily for your broker. Also, many brokers offer different pricing plans based on how many options you trade, so the best broker for a casual trader might not be a good choice for an active investor. You’ll also want sophisticated tools to help you take advantage of the benefits that options provide. Each broker offers its own trading platform with varying degrees of customization. The platform should make it easy for you to research a stock without getting bogged down by a lot of unnecessary charts or statistics. Having a platform that adapts to your needs is key to successful investing. Another essential for an options broker is access to research and education. Many online brokers attract new investors with low commissions but fail to provide the tutorials that will keep them trading.

The best brokers teach you investment strategies and give you a virtual trading arena to see how those strategies work (or don’t work) in real-time. Customer service comes in handy when you’ve got a question or find yourself lost amid a sea of graphs and charts and need some help to get back. Also, investing is time sensitive, so you want to make sure that if something goes wrong with the platform, someone will be there to make it right. Best Fees & Commissions: OptionsHouse. Fees & Commissions: $4.95 base + $0.50 per contract, 55. Trading Platform & Research: Virtual trading, webinars, 35. Customer Service: Telephone, e-mail, instant chat, M-F only, 45. If you want to start investing in options but don’t want to spend much money, then OptionsHouse is the best broker for you. It has the lowest costs of any major options broker, which can lead to big savings for all types of investors. OptionsHouse sells contracts based on how many you plan to buy. Investors pay a base of $4.95 plus $0.50 per contract. That means you can buy 100 contracts for $54.95. Another bonus for options newbies is OptionsHouse’s Virtual Trading Platform. You’ll have $5,000 in virtual money to try out new strategies or just practice your options techniques. OptionsHouse understands that one of the easiest ways to make more on your investments is to spend less on fees and commissions. Beyond the price, OptionsHouse also has more options-specific trading tools than the competition.

It’s an ideal combination of “for options traders, by options traders.” OptionsHouse provides the tools for trading but comes up short on teaching you how to use them. Novice investors looking for a master class on Options 101 will need to seek out third-party assistance. Who It Works Best For. The low costs make OptionsHouse ideal for high volume traders. Those who are just getting started in options should consider a broker that offers more education for a higher price. Open an OptionsHouse account. Best Research: OptionsXpress. Fees & Commissions: $4.95 plus $0.65 per contract, 45. Trading Platform & Research: Virtual trading, Xpress Method education training, 55. Customer Service: Telephone, e-mail, instant chat, live help available Saturdays, 55. OptionsXpress is the options-focused trading platform owned by Charles Schwab. It offers an extensive list of research tools that help break down the risks and rewards of options trading. You can practice trading without spending a dime, though, using the broker’s Virtual Trade. OptionsXpress gives you a free $25,000 virtual account that can access most of the tools that you’d use with real money, just without the risk (or reward).

OptionsXpress offers some of the most comprehensive investment tools on the market. Its online education center has all the lessons and tutorials you need to become a smart options investor. This includes the XpressMethod education center, which features several easy-to-follow videos on getting started. OptionsXpress also excels in customer service. Help is available Monday-Friday until 10pm EST, and it is the only broker in our study that offers live help on Saturday. Who It Works Best For. OptionsXpress really does provide an essential education for options investing, making it a solid choice for beginners. Best Value: Ally Invest. Fees & Commissions: $4.95 base rate + $0.65contract, 45. Trading Platform & Research: Options scanner, Options Education Center, 45. Customer Service: Telephone, e-mail, instant chat, M-F only, 45. Ally Invest combines low prices with extensive research to make it one of the best brokers for options trading. Each contract at Ally Invest costs $0.65, plus a flat rate fee of $4.95. That means a trade with 100 contracts will cost $69.95. The pricing is simple, straightforward and much lower than most of the competition. Despite the low cost, Ally Invest offers research and tools that rival more expensive brokers.

It has options-specific scanners to help gauge risks and an education center that’s designed for options rookies. Ally Invest provides a robust options trading platform for the lowest price. The education center is filled with information that will help young investors learn new strategies and help experienced traders brush up on their techniques. TradeKing lacks a virtual trading account for options investing. Who It Works Best For. Investors just getting into options trading will find Ally Invest the perfect place to start. The broker works well for high volume trading as well, but you’ll save money going with OptionsHouse instead. Ally Invest: Get $200 Cash Bonus or $500 in Commission-Free Trades. Other Brokers to Consider. If you’re looking for an options broker with a more personal touch, TD Ameritrade offers competitive contract prices with the benefit of physical locations. Options orders are $9.99 plus $0.75 per contract. Trading options is a risk but, like with any good investment, it’s a risk that can pay off. Perhaps this review has been the push you have been waiting for to explore what else the investment world has to offer beyond stock trades. Disclaimer: Opinions expressed here are those of the author's alone.

Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. More from CreditDonkey: OptionsXpress Review. Options Trading. Add Your Comment. You might also be interested in. Share on Facebook. CreditDonkey is a stock broker comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions. Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. †Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation.

This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace. *See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website. CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice. Best Options Brokers for 2017. Like many people, I was intimidated by options when I first started investing almost 10 years ago.

They seemed complicated, because they are. It soon became obvious, however, that locking in the ability to buy or sell securities at a set price would be a powerful way to tap into good investment ideas I might not otherwise be able to afford. Through the years, I’ve discovered that all of the best options brokers share a few things in common: low fees, no account minimums, and a user-friendly interface. In this article, I’m going to walk you through the three best options brokers out there, and how they’ll be able to help you with your own investment method. If you’re just getting started in options, TD Ameritrade offers the most educational resources to help you make smart decisions early on. If you already have a firm handle on your investment method and want to maximize your profits, there’s no cheaper online options broker than OptionsHouse. If you’re an active trader that’s looking to stay on top of daily trading volume trends or hourly changes in a stock’s chart, OptionsXpress is going to give you the most effective tools to do it. Each of these brokers caters to a different type of investor, but they all share a focus on low fees, no account minimums, and a user-friendly interface. The Simple Dollar’s Top Picks for the Best Options Brokers. Best for Beginners: TD Ameritrade Lowest Fees for Experienced Traders: Optionshouse Best Tools for Active Traders: OptionsXpress. What to Look for in an Options Broker. I have managed my own investments for a decade and use Merrill Edge as my primary trading platform because it’s linked up with all my other accounts. However, as a traditional broker, it’s pretty darn clunky when it comes to researching options. In all honesty, the only reason I stick with Merrill is because I have multiple accounts and enough money invested with them that they grant me some pretty nice perks to keep my business.

For those just starting off with options, those with a small account, or those who are very active and need a responsive interface of high quality, an old-school broker like Merrill that has simply bolted on an options trading platform probably isn’t going to be ideal for you. The good news is that there are a host of brokers out there that cater almost exclusively to options traders. The best have the following things in common: An options-specific platform: If you want to be serious about options, you’re going to want a broker that is too. A traditional broker focused mainly on stocks or ETFs can typically be clunky when it comes to researching options, or use a fee structure that doesn’t make active options trading cost effective. The good news is that there are a host of brokers out there that cater almost exclusively to options traders. And that’s because they were built primarily as a platform for options first and foremost – even if some were eventually bought by a larger company, or added tools for other kinds of traders down the road. Low fees: Minimizing risk also goes hand-in-hand with minimizing cost. It’s important to acknowledge that even a modest amount of fees will quite literally take the place of other profitable trades you could be making. Whether you’re trading options in the hopes of big profits or just using them for a defensive method, cost matters a great deal. Low account minimums: Many traders of modest means use options as a cheaper alternative to going long with a high-priced stock. If you have to have a minimum of $100,000 in your account or trade 50 times a month to get cost-effective access to those options, what’s the point? Most options traders can easily get by with a limit of $1,000 or so, but a lack of minimums at all is more preferable. Intuitive interface : The given price on an options contract can fluctuate significantly across the trading day.

If you have to fumble around with poorly formatted options chains, it can cost you. Education : Speaking of multi-leg options trades, when is it right to do a bull call spread? And what the heck is an “iron condor?” A good broker will provide resources to teach you more about the sophisticated option trading strategies you may not be familiar with out of the gate. Flexibility: If, like me, your favorite option is a covered call, that means you need to research and purchase plain old stocks and ETFs, too. And you’re not going to want to use another broker to do it. Nobody likes the hassle and cost of having multiple platforms to do multiple things. The Best Options Brokers. Cost Structure. Options: $9.99 flat rate, plus 75 cents per contract. Stocks and ETFs: $9.99 flat rate, though select ETFs are commission-free. Futures: $2.25 per contract Minimum Balance: $0. If you’re looking to explore options without sacrificing some of the investment options you’re used to, like low-cost ETFs, then TD Ameritrade strikes the perfect balance between worlds – and offers plenty of tips and tricks to help you learn how to trade options effectively, including webinars and an archive of educational videos to explain specific strategies. There’s no element of financial planning you can’t find through TD Ameritrade, which makes it a great one-stop shop, as well as a great entry into options for those more familiar with traditional stocks and bonds. TD Ameritrade may be a discount brokerage, but it is still one of the largest trading platforms in the world with almost $740 billion assets and almost 7 million client accounts. It has won new business in recent years mostly by catering to rookie traders, winning accolades for its accessibility, including five consecutive awards as the best platform for novices as ranked by respected investing magazine Barron’s . TD Ameritrade also recently acquired Scottrade with the deal expected to close by fall of 2017.

With Scottrade’s numerous customer service awards and brick-and-mortar stores, TD Ameritrade just amped up its market share of investors of all kinds. Easy-to-Execute Options Trades. When I first started dabbling in options, simply learning the lingo was hard enough. What the heck is a bull call spread? How can I be sure I’m making a covered call on my existing stocks and not accidentally selling shares I want to keep? Thankfully, TD Ameritrade cuts out the guesswork with easy-to-understand options trading tabs. Simply click on the “spread” tab if you want a spread, or click on the “single order” tab if you just want one leg. There’s also clickable links at the ready explaining the strategies on the order page, so you won’t have to find the answers to any last-minute questions elsewhere before placing your trade. Full-Service Platform. You can make stock trades for $9.99 on the platform, and trade from over 100 commission-free ETFs. There’s also the capability to trade futures and even forex if you really want to get sophisticated, or an avenue to buy annuities if you’re thinking about income in retirement. The fees are admittedly sometimes higher than some other providers – about 10% higher than the typical discount broker, and more than 50% higher than the best discount broker you’ll read about next. But those fees fund customer service resources that are available 247, so you’re getting something for that extra money. TD Ameritrade also has over 100 branches across 33 states for in-person consultation if you need it. Educational Resources.

As stated, the robust customer service and physical branches are great resources for newbies to options trading. But there’s also plenty of online resources for the self-starter, including both options screeners to help you identify new ideas, as well as hours of webinars and on-demand video to teach you about options strategies. Most importantly, you’ll also be able to learn how to execute those strategies within the TD Ameritrade platform. Reading a blog post is one thing, but seeing someone click through a trade is by far the best way to learn the ropes. Lowest Fees for Experienced Traders. If you’re looking for the most economical options-specific trading platform, OptionsHouse is the way to go. Whether you’re trading options or stocks or futures, it’s hard to beat its pricing – especially when coupled with its no minimum balance requirements. In summer 2016, OptionsHouse was acquired by megabroker E*Trade Financial. That should tell you two things – first, that E*Trade clearly understood it had to get with the times on options, and secondly that OptionsHouse was one of the most attractive platforms out there at the time. E*Trade could eventually integrate more with OptionsHouse to bolster its existing tools and research, and I’m interested to see how things progress in this partnership. But regardless of better tools down the road, one important thing to know about the present is that there will be no change to the existing low-cost structure that has made OptionsHouse so popular.

That means you can depend on the low-cost platform that has made OptionsHouse such a hit with experienced traders who might not need the additional educational resources provided by other higher-cost brokerages, like TD Ameritrade. A single-leg options contract is $5.45 all-in. That is the lowest rate I could find anywhere right now. But the low prices also extend to futures and stock trades as well, allowing you to manage your entire portfolio in a very cost-effective way. There’s also no minimum balance, making it really easy for even small-time traders to get started. If you’re trading hundreds or thousands of options contracts each month, there may be a few premium services that charge lower commissions thanks to a volume discount, but for the majority of options traders, this will be the absolute cheapest option available. A custom trading interface provides real-time market data and speedy execution to make sure you are making the most of what the market gives you. The design is clean, and there’s tons of information at your fingertips without cluttering up your screen. The platform is very intuitive, but if you do have a question, you’ll quickly find answers in the robust tutorials for new users. The interface also has been seamlessly ported for mobile devices, with iconic investment magazine Barron’s giving OptionsHouse a perfect 5.0 score on its mobile experience in its 2016 broker rankings. User-Friendly Risk Management. The OptionsHouse tradeLAB tool offers one of the most user-friendly tools I’ve seen to dissect options spreads. There is a green smiley face besides the statistical probability of making a profit, and a red frowny face showing your probability of a loss – so no need to decipher any weird calculations here.

You’ll also get other important information at a glance, any upcoming earnings reports or dividend distribution dates, in addition to expiration. Figuring out the potential performance of your options over time can be tricky, and OptionsHouse takes a lot of headaches out of the process with tradeLAB. Best for Active Traders. Options: $12.95 flat rate, $1.25 per contract in lots of 10 or more Stocks and ETFs: $8.95, though select Schwab ETFs are commission-free Futures: $3.50 per contract Minimum Balance: $0. I mentioned the potential of better tools at OptionsHouse down the road because five years ago we saw a case study in how a big broker can really turn up the juice on a smaller options platform. And the result is the current OptionsXpress platform, which is unrivaled in its tools and research. If you’re an active trader, tools are like food and water to you. While casual or beginner traders looking months down the road may not need to stay on top of daily trading volume trends or hourly changes in a stock’s chart, active options traders can’t live without that info – and OptionsXpress knows this. OptionsXpress was purchased by Charles Schwab in 2011 as a way to improve the legacy broker’s offerings for traders. Since then, the marriage has resulted in the best of both worlds – the slick, professional feel of a big-time firm, along with the agility of an options-native platform. The icing on the cake for OptionsXpress is the ability to trade stocks, ETFs, and even futures alongside options, giving active traders a one-stop shop to make the most of their investing ideas. From its attractive charting interface and its Idea Hub that helps you browse market trends, to its exclusive automatic execution tool, Walk Limit, which helps you place orders at the best price, Options Xpress has the best toys in the space.

Everything down to the trade tickets are easy to understand at a glance. To help you keep growing as a trader, there are also weekly webinars, an archive of on-demand educational videos, and regular email updates via its daily Options Xpresso email blasts to keep you focused on market risks and opportunities. There’s even an interface to help you practice trading without investing any real money, as a way to test your options trades in real time without any financial risk. I could go on, but you get the idea – there are plenty of tools for investors of every method and style, whether you’re playing a long-term trade or moving quickly in and out of positions. Free Broker Assistance. Any time you need help, licensed options brokers are available to help you at no-additional cost. That can provide much-needed peace of mind for rookies, or help unwind a complex method for seasoned traders who may find themselves in a bind. You can even get advice on futures and ETFs if you want. Between this access and the tools, there’s literally no method you can’t handle with OptionsXpress. Active Trader Discounts.

Standard options rates are admittedly a bit pricey using OptionsXpress, but active investors who book at least 35 trades per quarter will qualify for a volume discount of as little as $1.25 per contract when booked in groups of 10 or more. There’s also a discount for contracts trading for less than 5 cents, with so-called “penny options” costing a $4.95 flat rate, or 50 cents in lots of 10 or more. That makes it much more cost-effective to bid on way out-of-the-money options. You won’t be able to top OptionsHouse on pricing, of course, but you will certainly save over most of the competitors out there if you trade in lots of 10 or more. A Word On Options Expiration and Alerts. Options can be very profitable if done right, but I’d like to use this space for a public service announcement: Options are contracts that must be acted on, or they expire worthless. That means making sure you have a good grasp of your specific option expirations, and that may mean finding out how to set reminders or alerts via your broker. It is not uncommon for less vigilant or inexperienced options investors to just throw up their hands and eat a bad trade. But, remember: sometimes it’s financially advantageous to close an option position early, or to close an option at a smaller loss than allowing it to execute. Let’s say you spent $100 to for an options contract that gives you the right to buy 1000 shares of XYZ Corp. at $10 a share, and the contract expires in two months. Your hope is that shares will rise to $12 so you can buy 1000 shares at $10 per your option contract and then immediately sell them at $12 for a $2,000 gain. Unfortunately, some bad news in a week or two pushes XYZ down to $8 a share – meaning you’re deeply “out of the money” and buying at $10 would result in a $2,000 loss instead.

Again, the great thing about options is that you don’t have to buy those shares at $10 if you don’t want to, and can just let the contract expire. You’re out $100, but that’s better than a $2,000 loss. However, you could also sell that options contract to someone else instead of waiting until expiration. They probably will give you a fraction of what you paid since the options are pretty unattractive, maybe only $5 or $10. But hey, it’s better than zero. Your personal method and specific trades are up to you, but all options traders run into scenarios like this eventually and many just throw up their hands and give up. Believe me, over time that extra $5 or $10 you salvage from seemingly worthless options will add up particularly if you’re an active trader. To this end, I highly recommend emails, text alerts, or calendar reminders to let you know when your options are set to expire. Whatever your broker, spend some time exploring the tools they provide to help, and find a system that works for you. TD Ameritrade, OptionsHouse, and OptionsXpress are the best options brokers currently available, because they all meet the criteria for cost-effectiveness, quality research tools, and having a smooth user interface. While TD Ameritrade isn’t the cheapest broker to place individual options trades through, it’s reasonably priced and has a $0 minimum balance, robust customer service, and educational resources that are extremely helpful for beginning options traders to get started. If you’re looking for the best platform for active traders, I highly recommend the slick interface of OptionsXpress. If you are more interested in cost-effectiveness over tools, go with OptionsHouse.

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