What hours is it staffed? What about representatives who can answer questions about your account? Even before you apply for an account, reach out and ask some questions to see if the answers and response time are satisfactory. Options trading platforms come in all shapes and sizes. They can be web- or software-based, desktop or online only, have separate platforms for basic and advanced trading, offer full or partial mobile functionality, or some combination of the above.
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Is the platform design user-friendly or do you have to hunt and peck to find what you need? Can the platform do the things you need, like creating alerts based on specific criteria or letting you fill out a trade ticket in advance to submit later? How reliable is the website, and how speedily are orders executed?
This is a high priority if your strategy involves quickly entering and exiting positions. Does the broker charge a monthly or annual platform fee? If so, are there ways to get the fee waived, such as keeping a minimum account balance or conducting a certain number of trades during a specific period? Some of the basics to look for:. Basic charting to help pick your entry and exit points. Those venturing into more advanced trading strategies may need deeper analytical and trade modeling tools, such as customizable screeners; the ability to build, test, track and back-test trading strategies; and real-time market data from multiple providers.
Check to see if the fancy stuff costs extra. For example, many brokers provide free delayed quotes, lagging 20 minutes behind market data, but charge a fee for a real-time feed. Similarly, some pro-level tools may be available only to customers who meet monthly or quarterly trading activity or account balance minimums. But because commissions provide a convenient side-by-side comparison, they often are the first things people look at when picking an options broker.
A few things to know about how much brokers charge to trade options:. The two components of an options-trading commission are the base rate — essentially the same thing as the trading commission that investors pay when they buy a stock — and the per-contract fee. Some brokers bundle the trading commission and the per-contract fee into a single flat fee.
What Are Options?
Some brokers also offer discounted commissions or contract fees based on trading frequency, volume or average account balance. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money. The investing information provided on this page is for educational purposes only. NerdWallet does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
What are options? Sell the contract to another investor. Select a well-regulated broker that offers options on the asset classes you most want to trade along with a good options trading platform and tight dealing spreads. Since options are more advanced trading instruments, you may also need to qualify to trade options via a particular broker. Rather than jumping right into trading options with real money, it makes sense to first practice trading options in a demo account. You can then incorporate them into an overall trading plan that lays out how you intend to operate your options trading business and manage your risk capital.
Always make sure you have placed enough funds on deposit with your broker as margin to support your options trading strategies and trade only with money you can afford to lose. When selecting an online options broker, keeping options trading commissions low is important to just about any trader.
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You also need to watch out for any hidden fees a broker charges for you to use their trading platforms or access market data. Take into account your planned trading style, your need for educational materials and any tools you think you will need to trade options successfully.
You will also want to watch out for any unregulated online options brokers that might be trying to scam you.
Check to see that a broker is overseen by a major regulatory authority before funding an account with them. Note that options brokers may also check how much experience you have before giving you permission to trade options and may set limits on your options trading activities. To help you narrow your search, Benzinga has compiled a table below comparing some well-regulated online options brokers you can approach to trade options through. Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices.
A subsidiary of Futu Holdings Ltd. Securities offered by Futu Inc. Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes. Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients. Tastyworks is a sophisticated options and futures broker aimed toward experienced traders.
Options Trading Strategies: A Guide for Beginners
The platform was designed by the founders of thinkorswim with functionality and precision for complicated options trades and strategies. Tastyworks offers stocks and ETFs to trade too, but the main focus is options. Webull, founded in , is a mobile app-based brokerage that features commission-free stock and exchange-traded fund ETF trading. Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling.
Trading options has several notable advantages over just trading the underlying asset. Some of them are discussed below. The leverage that trading options provides can allow you to control large positions with relatively little money.
If you think shares in Apple Inc. Using options lets you modify your risk profile when trading to adapt to a specific market view. For example, you can buy a call option to take a bullish view on the underlying asset while having your risk limited to the premium you initially paid. Although using options expands the choices traders have to express a market view, they do have a few possible disadvantages you should be aware of. Unlike an actual asset, options contracts expire at a certain time. This means you need to take a market view that also has a time frame associated with it when trading options.
With stock options, when you hold a call option on a stock, you do not receive any dividends paid out to holders of the underlying stock. Compared to simply buying or selling an underlying asset, options and the various options strategies you can use when trading them require education to understand and use them effectively. Options provide traders with a greater choice of ways to express a market view. Since options can add considerable complexity to your trading activities, however, you will want to educate yourself thoroughly about how to best use them so that they boost your bottom line as a trader.