Options give you a different way to invest, albeit with some alternative risk factors. If you’re currently trying to diversify your portfolio and take on some higher risk trades (depending on how you play it).
Trading options come with fees, and the platforms you use will dictate how much you have to shell out. We’re here to talk about options trading platforms that don’t rip you off, and keep your interests at play.
Robinhood is commission-free investing trading app that has tools to help shape your financial future. They are my #1 recommended choice after researching over a dozen options trading brokers.
Best Brokers for Options Trading
Summary of Best Options Trading Brokers of May 2022
Best Trading Platform
Options are stocks, but they’re an entirely different ball game to standard stock trading. Buy low, sell high doesn’t really apply here—which is why you need an all-inclusive service like the apps and brokers we’ve listed below.
They offer the tools necessary to help you succeed as an options trader. Many online reviews will focus on the most marketed aspects of these services, but we’re here to talk about options, and any other elements of these services that affect options trading.
We’ve narrowed down this list and gone with the best of the best so that you don’t have to.
1. Robinhood - Best Overall
Robinhood is your one-stop-shop for a lot of different aspects of stock trading. Options are stocks, and at the end of the day, Robinhood has done a fantastic job of making a simple, easy-to-use, easy-to-fund platform that’s secure and trustworthy.
They’ve had their fair share of controversy in the past, but when it comes to options trading, they’re known for transparency. Options trading doesn’t have to be a difficult process, and thanks to Robinhood’s app, it’s simple from start to finish.
Plus, their newsletter, Robin Hood Snacks, is super helpful for learning about company and industry news in a quick bite-sized read, so you can stay up-to-date on information on the options you’re buying and selling.
2. Webull - Best for Beginners
Newcomers are going to get more information, knowledge, and experience from Webull to start things out. Options can get complicated, but because of the way that Webull allows you to buy options in multiple purchase types, you can experiment with all that options trading has to offer.
Plus, nobody wants commission fees when they’re just starting out, right? Webull is identical to Robinhood when it comes to the lack of fees on options trading, stock trading, and other areas of investing.
The drawbacks are few and far between; you’re always getting the best options and the best information with Webull.
3. TradeStation - Best for Active Traders
TradeStation is a name you might have heard before, because at the time of writing, they’re locking-in on their fortieth consecutive year in business. They’re time-tested, trusted, and used by options traders from coast to coast.
They have some fees that pop up from time to time, but luckily TradeStation is 100% transparent about where and when you’ll encounter them.
Overall, it’s a solid experience that any investor can enjoy, and their UI is so easy to navigate that it’s a seamless process. Other investment platforms should take note.
4. Tastyworks - Best Trading Platform
Tastyworks is short, simple, and to the point: it was made for options traders first, and other investment types second. You get hit right in the face with plenty of information and charts right away, so the UI can be overwhelming for beginners.
While Tastyworks is definitely geared towards intermediate-level options investors, it does lack news information which could help you make your investment decisions all within the app/site, but as a trading platform itself?
5. Questrade - Best for Canadians
Questrade sounds like something out of an RPG video game, but in fact it’s the leading app and brokerage service in Canada. This means it is exclusive for Canadians, even if you’re a dual citizen, so if you spend your winters in Florida as a US citizen you won’t be able to use Questrade.
It’s an intuitive service with some of the fastest responsiveness out there (considering the power and lower user base, it’s not crowded all the time like some apps).
Questrade is the best app any Canadians can use, even if it does come with less market data than some other apps and brokerage services.
How Do You Start Options Trading?
It sounds obvious, but the first thing that you have to do is open the account. This includes personally identifying information for tax purposes, so it can take a few days up to a week. Do this before you think you need to.
Learn the market, and be selective of what options you want to buy or which ones you want to sell. You have to predict the strike price for the options, designate a time frame, and utilize an options trading strategy.
There are plenty of strategies for beginners. Options trading requires you to know the platform and how stocks work before you get invested, which is why many beginners don’t start with their first-ever trade being in options.
How to Choose an Options Trading Platform?
What do you value the most? More types of options to trade, or lower fees? Free transactions? The best thing you can do right now is make a list, and prioritize what you want above all else. Start there.
Every platform is going to have its pros and cons. At the end of the day, you’re dealing with businesses that have to turn a profit somewhere. If one aspect of your involvement with their platform is free, other areas are not, and every one of these platforms are going to be different once you get to the nitty gritty.
For first-timers, you should consider fees and what you anticipate to invest upfront. If you can get by with zero fees for buying options and your budget is small, that will work nicely.
If volume is your issue, look for trading platforms that don’t incur fees on larger buy orders.
Line everything up, and see which ones meet the most of your criteria.
Methodology in Selecting These Top Picks
Utilizing public information, the individual brokers and app pages, their commission pages, and cross-referencing them with anecdotal information online pertaining to individual reviews and professional reviews, we were able to determine the validity and customer service rating of these services.
Instead of an arbitrary number, we labeled each of these five best brokers and stock services based on their most prominent strengths to help you narrow down what matters most to you, and prioritize that while looking at top-tier options.
Every options trading platform on this list has something to offer you. We used our specific methodology to bring the best ones in front of you, and allow you to choose for yourself.
We don’t know your specific needs, but we can help point you in the right direction for the options trading platform that will end up being your best personal solution.
You have five excellent options here, you just have to know what you want before you bother signing up with one of them. We have additional guides and articles on options trading that you should take a look at before you make a final selection on the options trading platform that suits your needs.
Options Trading FAQ's
An option is a type of stock that allows you to buy and/or sell at a specific price, known as a strike price. The buyer enters a contract with a predetermined amount of time before that contract, and therefore the contract price, expires.
Options can help increase the price of stocks, which is one of the reasons that you need to pay attention to volatility when buying or selling them. Because of the contractual strike price, investors can be selective with a lower risk of loss.
Because options trading requires you to purchase stock blocks, you have to invest based on the stock block strike price, times whatever the block requirement is (typically 100 stocks).
Typically, options that are below $1 per share or $100 per block aren’t going to give you a big return (as is with any investment), so a lot of traders recommend starting with $10K.
But remember, because there’s still risk involved, you should never use more money than you’re comfortable losing.
Options trading has the position to be less risky than other forms of investments, however you’ve probably already found tons upon tons of forum-related content discussing people losing money on options left and right.
Options trading is not that risky, if you stick to buy options and understand what you’re getting yourself into each and every time. You can make a good investment income off of options trading.
You should buy options when volatility has a likelihood of going up, and sell those options when the volatility has a chance of going back down. It’s better to buy options than sell options.
A call option is a contract that allows you to buy stocks at a specific price, for a specific amount of time. These prices are determined in the contract and held for a specific amount of time, so if the stock price rises, the buyer can still purchase shares at the strike price (the price determined in the contract), and sell at market value.
A put option is the opposite, giving the buyer the right to sell stocks at a specific price in a short amount of time, so if the stock falls in price, you can sell at the agreed upon strike price without taking as much of a loss.
There are multiple types of investing strategies with a blend of high-risk and low-risk investments. Options can be safer than stocks if you’re very careful, although because of many individuals not understanding how options work, options have often been thought of as the riskier investment in this case.
Options trading is part of a healthy portfolio, so it doesn’t necessarily have to be better than stocks since you should have a blend of high-risk and low-risk investments.
It depends on the investor more than the investment type itself.
Robinhood has commission-free investing, and tools to help shape your financial future. Sign up and get your first stock free.
Best Brokers for Options Trading Recap