Once you’ve learned the basics of day trading – you might get the idea that the process is easy: buy options, sell them within the day, repeat the next day. Don’t let that fool you, however; options day trading can get a little bit tricky. This is where trading platforms come into play.
Online brokers love the options day trader, most likely due to its higher returns compared to stock trading. This encourages stiff competition, leading to innovative solutions and friendlier price points, which is a great plus for investors and day traders.
This article will discuss all you need to know about the options trading platform and online options trading in general. First, I’ll give you the essential factors and features that you need to consider before choosing an online broker to manage your day trade options. Once that’s settled, we’ll discuss the five best platforms available – from general overviews, price points, advantages, disadvantages, and other useful information.
Let’s get started!
Top 5 Options Day Trading Platforms
min Balance req
$4.95 + $0.50 per contract
$4.99-9.99 + $0.20-0.70 per
contract (based on volume)
Superior Platform Interface
$12.95 (Active Trader)/$14.95
(Standard Trader) + $1.25-1.50
per contract (based on volume)
$1000 (waived with
$100 monthly auto-deposit)
$8.95 + $0.75 per contract
Research & Analysis
$9.99 + $0.75 per contract
Research & Training
Factors to Consider Before Choosing an Online Broker for Day Trading Options
More frequently than not, individuals tend to choose brokers with the lowest price points. While cost and fees are indeed important, they’re not the only things you should consider before choosing an online broker for trading options. Sure, you might get the least expensive broker – but at what price? You also need to take into consideration the following factors:
Interface and Simplicity
These factors may be even more important for beginners in day trading. Online brokers exist to make your life and investment processes simpler and easier – not the other way around! You’ve got enough to worry about in formulating strategies for day trading, you really shouldn’t be wasting time figuring out how to use a trading platform.
Commissions and Fees
I still have to mention it, as it is an important factor to consider.
Commissions and fees can make or break your actual returns on investment.
Be wary of fees that may be hiding in plain sight or are written in fine print, such as maintenance fees and trading fees. Similarly, commissions and fees should be direct, to the point, and simple in nature.
Available Research and Technological Tools
These are arguably the most important points to look for in a trading platform. Research – which includes opinion articles by the pros, corporate publications, and news in general – can help you make smarter decisions in day trading. These should be readily available in the online platform you choose, and should be updated promptly. Trading tools, on the other hand, will help you analyze trends that may be based on the research data available on the site.
Make sure that the online broker you choose is affiliated with trusted associations. For more information, visit the Financial Industry Regulatory Authority’s (FINRA’s) website..
Your broker should also be able to guide you step by step. There’s nothing like great customer service, online brokers’ included.
There are a lot of other features that you might look for once you get the hang of it, but the factors listed above are the most basic ones to look out for in online trading platforms.
The Five Best Trading Platforms
Now that you know what features to look for in an online broker, you may start to wonder: which should I choose? You might be overwhelmed by the amount of platforms available for day trading options. Simply visiting their websites might not be enough for you to comprehend their services.
But don’t worry. We’ve got you covered! We did the research for you and tested various trading platforms available for day traders.
Here are the five best option trading platforms (in no particular order), along with some information on their fees, key features, pros, and cons.
Minimum balance requirement: $0
Commission for options: $4.95 + $0.50 per contract
OptionsHouse has one of the lowest commissions for options trading, which makes it attractive for beginners and experienced users alike. Founded in 2005, OptionsHouse quickly became one of the top choices for day traders for its low base rates. If you’ve decided to go for discount brokers, OptionsHouse may be the best choice for you.
In 2014, OptionsHouse merged with TradeMonster, which helped improve its overall trading capabilities. One feature that many users love about OptionsHouse is its highly customizable platform, where you can tweak and select the sections you prefer to see on your dashboard. The website also provides you with useful options trading tools, such as options chains, risk viewers, and option calendars.
OptionsHouse also boasts of its fast order entry. Processes are streamlined (a guide they call ‘tradeCYCLE’), and you can input orders and add stocks with ease, and in an instant. Beginners may also find OptionsHouse attractive with its archived webinars that teach you how to go through day options trading.
There is a downside to the simplicity and efficiency of OptionsHouse, however; it may not be for individuals looking for platforms that have a number of investment products (for one, it lacks Forex trading). Its name speaks for itself: it mainly focuses on options. Lastly, OptionsHouse is not a full service broker. As previously mentioned, this is for those who are looking for a discount broker. OptionsHouse is perfect for those seeking low fees, advanced trading tools and platform, and efficiency.
Minimum balance requirement: $5,000
Commission for options: $4.99 to $9.99, with $0.20 to $0.70 per contract (based on volume)
TradeStation has one of the best design interfaces and platforms among online brokers, a major reason experts shower it with praises. It’s also one of the fastest and most efficient online trading platforms, with fast order placements and trade executions incorporated.
For a visual of the interface and a review of the platform by Chris Dunn, see this video:
One of our favorite features on TradeStation is its OptionsStations tool, which makes analysis of possible option trades infinitely easier. It also includes a P&L chart in 3D format – visualizing your profits and losses and helping you choose better potential trades. You can even rank possible trades, and analyze various options positions. Tools are also available for you to formulate and test out your trading strategies – and even earn from them by selling these strategies to interested investors.
Another plus for TradeStation is its availability on mobile (on both iOS and Android). The app isn’t quite as comprehensive as the web platform yet, but you can still view and analyze real-time data and make trades. This is very important for day traders, as you have to be alert to sudden changes any time – and you should be ready to make the trade.
A word of warning though: TradeStation issues a monthly brokerage fee worth $99.95, and it’s not for those who are conservative with their options as it is more beneficial for those who trade in bulk. If you’re into trading massive volumes of options, though, then TradeStation may be the perfect platform for you.
Minimum balance requirement: $0
Commission for options: $0 Base Fee, $12.95 to $14.95 + $1.25 to $1.50/contract based on volume
OptionsXpress mainly focuses on features that would highlight its strength in options trading, such as real-time options trade data, quotes, and options chains. Similar to OptionsHouse, OptionsXpress’s platform is highly customizable, and is very easy to use.
OptionsXpress also is one of the faster and more efficient online trading platforms available. Inputting an order with a wide array of different options is possible with its simple, all-in-one interface. The platform also offers useful trading tools such as price calculators, and charts that will help you track different options’ volatility. One of their most powerful tools is the DragonTool, which lets you search for options based on your personal preferences and strategies.
Beginners also can find resources in OptionsXpress that would be useful: for one, they have a virtual trading platform that lets you invest $25,000 in virtual money – which can help you create and fine-tune your trading strategies in real life. OptionsXpress also has an Education Center, which houses videos that teach newbies the how-tos of day trading. In addition, new users get a free 13-month subscription to a daily financial newsletter which cites notable news, publications, reports, and trends in the market – very handy for those looking to earn more in the options trade.
Like TradeStation, however, OptionsXpress favors those who trade options more actively. So if you’re just starting out and are just trying to test the waters in day trading, their pricing structure may not be the most preferable – you’d be better off with OptionsHouse. But if you’re an experienced day trader who trades on a regular basis, their pricing is a major plus. Another disadvantage to consider is that their customer service includes chat and telephone clients which you can access during the day, but the 24-hour customer support is only available to futures traders.
Minimum balance requirement: $1,000 (waived if you have an automatic deposit of $100 per month)
Commission for options: $8.95 + $0.75 per contract
The parent company of OptionsXpress, Charles Schwab is one of the frontiers of options trading. The company was founded in 1971, and has garnered vast experience in the options trading game. They’re not limited to options trading, though, as they are a full investment company (which can be an advantage if you’re looking to trade investment products other than options).
Charles Schwab is one of the best platforms if you’re looking for research data, analysis, and trading tools. Similar to OptionsXpress, Charles Schwab offers a customizable platform for those who want to incorporate their personal preferences on the interface. Beginners and advanced traders alike will also enjoy their other useful resources, such as live webinars, educational videos, seminars (at Charles Schwab outlets) and financial commentary by the experts.
While there is a vast amount of resources that can be found at Charles Schwab, some users have complained that the interface looks a bit disorganized, especially if you don’t know specifically what you’re looking for. Though they offer 24-hour customer service, many have also said that Charles Schwab’s email support is not on par with other options brokers’ levels.
Minimum balance requirement: $0
Commission for options: $9.99 + $0.75 per contract
You’ve probably heard of TD Ameritrade, and you’ve most likely even tried one of their most popular virtual trading tools, thinkorswimⓇ. But TD Ameritrade’s services don’t just stop at virtual trading, they also offer one of the best online options platforms currently available.
Their much-lauded analytical tools, thinkorswimⓇ and Trade ArchitectⓇ, offer users with highly functional features that can help you follow market trends, analyze them (through graphs and charts), formulate a strategy, and implement them instantly. Advanced users in particular will likely enjoy these features (with their wide array of settings that can be customized), but beginners are also welcome in their very user-friendly online platform interface. TD Ameritrade also comes with a mobile app, suitable for those who want to closely follow news and trends in the market.
Aside from their advanced trading tools, TD Ameritrade has some of the best research data and commentary available for options traders. They also provide users with experts’ commentary, reports, and charts (among many others!) when you look for a quote for a company.
Courses are available for users in all levels (Beginner, Advanced, or Expert). Aside from these helpful materials, TD Ameritrade also offers live and online seminars and workshops, and other educational videos.
These amazing features come with a heftier price, however. TD Ameritrade’s commission and fees are significantly higher than their competitors. Those who are looking for international market access won’t find it on TD Ameritrade, either. But, if you’re willing to spend more for better tools and data, TD Ameritrade hits the nail on the head.
I have provided with you with important factors to consider before choosing an online options broker, and some exceptional online trading platforms. A final word of advice: before choosing the platform you really want to use, make sure that they pass all your requirements – and are equipped with the tools that you want to use.
If you’re not sure exactly what you’re looking for in online trading platforms yet, don’t worry – you’ll learn that along the way. You’ll form your preferences over time and learn valuable things about options trading, and you’ll find the best options trading platform for you. All of the platforms listed above are helpful for traders of all levels, so don’t be afraid to try it out and start day trading!