Options are contracts made with underlying securities. The idea is you’re reserving the option to buy or sell the underlying security at a particular future date, although buying an option doesn’t mean you’re obligated to buy or sell.
Traders also trade options themselves. Fluctuations in market prices for underlying securities will drive changes in options prices before they reach their maturity date, and that serves as a basis for trading. You can learn more about the basics of options trading in RagingBull’s extensive online education center, as well as our visual training center, which provides illustrations of trading analytics and strategies.
What Are the Best Options Trading Platforms?
If you’re looking to get involved in options trading, you’ll need to work through an online brokerage that supports options. Which platform is the best options trading platform depends on what you’re looking for — each has its pros and cons. Some platforms are great for beginners, while others are better suited for advanced or professional traders.
Our list of best options trading platforms includes:
- TD Ameritrade.
- Ally Invest.
- Interactive Brokers.
- Charles Schwab.
Here, we’ll review the qualities, pros, and cons of each of these options trading platforms. If you’re looking to trade options, first check out our comprehensive guide to getting started with options trading. The guide will explain everything you need to know about options trading, as well as our favorite tips for buying and selling options.
1. TD Ameritrade
TD Ameritrade wins plenty of plaudits as an overall platform. Traders love TD Ameritrade’s comprehensive resources for beginners, its reasonable pricing, and its ability to work well for both new traders and professionals.
TD Ameritrade charges $6.95 per trade, plus 75 cents per contract. There is no account minimum. Additionally, TD Ameritrade offers a promotion that gives you 60 days’ worth of commission-free trades on options and exchange-traded funds (ETFs) when you make a deposit of $3,000 or more. Larger opening deposits will get you additional bonus deals.
TD Ameritrade is great for beginners because it offers plenty of resources for those just starting out in options and other securities. Its Think or Swim platform provides Wall Street-quality information. TD Ameritrade is, therefore, a great one-stop shop of a platform for beginners looking to get into trading options, as well as seasoned professionals.
E*Trade is one of the most popular online brokers, and it’s a great platform for expanding your options trading skills. E*Trade does not charge commissions on options, stocks, or ETF trades and provides a large investment selection.
Beginners especially appreciate E*Trade’s library of resources and extensive research. It also has an advanced mobile app that makes it easy to access on the go. The dedicated OptionsHouse platform provides research tools and data specifically for trading options. One of E*Trade’s downsides is the website can sometimes be difficult to navigate.
TradeStation is a great choice for experienced traders. Active traders enjoy the flat-fee plan and the TSgo plan, which comes with $0 trade commissions in exchange for pared-down features. However, a lack of commission-free mutual funds and ETFs can be frustrating for some investors.
TradeStation is ideal for experienced traders or professionals because of its high-octane performance. It provides piles of highly sophisticated analytical tools and research, which aren’t as useful for beginners still learning the basics. In fact, TradeStation often sells its software tools to professional investors, which shows you how good its tools are. Also be aware of the $2,000 balance or five trades per year minimum requirement to avoid an annual $95 account fee.
4. Ally Invest
You’re probably already familiar with Ally Bank — Ally Invest is like its younger sibling. The bank is well-known for offering low fees and easy-to-understand contracts, and Ally Invest is similar. Many traders enjoy Ally Invest’s no minimums and low costs.
Trades cost $4.95 per trade, plus 65 cents per contract, but there’s no account minimum. This means Ally is a great place to start learning trading options without worrying about maintaining a big account balance or getting charged lots of fees. You can also take advantage of promotions where you can get bonus cash in exchange for a minimum account balance. Experienced traders also like the powerful trading platform and the valuable analytics and data Ally Invest provides.
Ally offers a wide range of services geared specifically toward options traders, so it’s a great platform to explore if you’re looking to get into options.
5. Interactive Brokers
Interactive Brokers is lauded for its per-trade fees, which make it a strong choice for frequent, high-volume traders. Interactive Brokers offers no per-trade fees and options commissions of 70 cents per contract. High-volume traders might also qualify for specials such as lower pricing per contract in exchange for trading a certain number of contracts per month. Traders who focus on ETFs and stocks will also find Interactive Brokers’ pricing structure attractive.
However, this means Interactive Brokers is not as useful for passive investors or those who only make a few trades per year or want to avoid maintaining a large balance. Interactive Brokers requires traders to have a startling $100,000 minimum balance or at least $10 in commissions per month (or a $10 monthly charge) to avoid an inactivity fee.
One of Interactive Brokers’ cool new features is IBot, which lets you ask questions and get quick answers, rather than having to search the platform for information or analytics. It’s a good resource for people doing a lot of research and wanting information at their fingertips.
The web version of the Trader Workstation lacks some of the features you get with the downloadable platform. Additionally, you can only access streaming quotes on one platform at a time, meaning if you log in on your mobile app and your computer at the same time, one of the platforms will be restricted to snapshot quotes.
New traders could be turned off by the lack of educational resources and high balance requirements, so Interactive Brokers is likely better suited for advanced traders and high-volume traders.
Lightspeed is an online brokerage that focuses on experienced and active traders who appreciate the platform for its tiered pricing. Lightspeed offers free trades and 60 cent charges per contract with a $1 minimum per trade.
Lightspeed’s tiered pricing starts at a volume of 500+ contracts per month. Depending on your trade volume, you can access different bonuses ranging from 50 cents at 500-2,000 contracts per month to 20 cents at a volume of 100,000+ contracts per month.
Lightspeed’s options trading platform is called Livevol X. It offers customized layouts, historical analytical data, integrated order execution, and other useful features. These make Livevol X great for more experienced options traders, while not as friendly for beginners as platforms like Ally Invest or TD Ameritrade.
The platform has desktop, mobile-based, and web versions. Stock traders appreciate the Lightspeed Trader platform’s analytical tools, including scanners that help spot trading opportunities and customizable advanced charting features.
7. Charles Schwab
Founded in 1973, Charles Schwab is an eminent brokerage that handles more than $3 trillion in client assets. It provides commission-free stock trades, as well as a suite of research tools, professional financial planning for the future, and quality trade tools.
Charles Schwab is known for its customer service, so it’s no surprise its phone service is exceptional. Its platforms are robust and satisfying for most traders, including options traders and day traders. The platform also provides a set of educational materials for new traders, making it suitable for beginners wanting to learn more. Charles Schwab also offers top-notch reports and retirement planning.
While the Charles Schwab mobile app offers many features, its lack of some mobile trading features can be frustrating.
Ready to learn more about making money by trading options? Check out RagingBull. We’re the premier destination for new traders and veterans of the markets alike to learn the tricks of the trade and hone their craft. Sign up for a free training session with one of our millionaire expert traders today. For a limited time, you can also pick up a free copy of Jeff Bishop’s e-book Option Profit Accelerator to learn how to trade options like a pro.