Best Options Trading Brokers and Platforms of 2024
The best Option trading platform in 2024 - eToro
The 7 best Option trading platforms in 2024 are:
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1
eToro - Simple and easy options trading (free options trading available only in the US)
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2
eOption - Specialized trading platform
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3
Interactive Brokers - Best for international traders
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4
Degiro - Best in EU
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5
TD Ameritrade - Ideal for professionals
In the fast-paced world of options trading, choosing the right broker and platform is very important for success. As we draw near the end of 2023, a new wave of options trading brokers and platforms has emerged, each offering unique features and advantages. In this article, the experts at TU will guide you through the top options trading platforms and brokers of 2023, and give you insights into their key features and notable considerations.
Best Options trading brokers in 2024
eToro - Simple and easy options trading
| Parameter | eToro |
|---|---|
Fees |
Free |
Minimum deposit |
USD 200 |
Fees class |
Low |
Deposit method |
Bank transfers, eToro Money, PayPal, Skrill, and Neteller |
Withdrawal method |
Bank transfers, eToro Money, PayPal, Skrill, and Neteller |
Withdrawal fee |
$5 withdrawal fee |
Number of trading instruments |
5,000+ instruments from a wide range of asset classes |
Inactivity fees |
$10 per month after twelve months of inactivity |
eToro stands out as an exceptional option for traders, with a focus on simplicity and cost-effective Options trading. Operating exclusively in the United States, eToro offers zero fees per Options contract, and a remarkably low account minimum of $50. What sets eToro apart is its user-friendly platform, which allows for commission-free trading across stocks, ETFs, and Options.
One of eToro's standout features is CopyTrader, an innovative tool that enables users to follow and replicate the trading strategies of seasoned investors. This is particularly advantageous for beginners who seek insights from experienced traders. Detailed trader profiles with ratings, performance history, and risk profiles aid in identifying the most suitable traders to follow.
eToro also provides an array of research resources, including economic and earnings reports calendars, market analysis series, and podcasts. In addition, it offers access to Trading Central, although this feature is exclusive to eToro club members at specific tier levels. In addition, research reports for stocks are available to funded account holders.
Key features
Access to zero-commission Options trading
CopyTrader feature for mirroring experienced traders
Comprehensive charting tools with 66 indicators
Rich economic and earnings calendars
Trading Central access for select members
Robust research reports for stocks
eOption - specialized trading platform
| Parameter | eOptions |
|---|---|
Fees |
$3.99 + $0.10 per contract |
Minimum deposit |
$0 for U.S. residents; International accounts require a minimum of $25,000 in equity |
Fees class |
Low |
Deposit method |
Wire Transfer, Electronic Transfer (ACH), Check, Account Transfer, Stock Certificate, and Depositing Funds and Securities |
Withdrawal method |
Same as deposit methods |
Withdrawal fee |
First is free, then 2% per transaction |
Inactivity fees |
$50 on accounts that haven’t traded at least twice in the past 12 months or have less than $10,000 in credit or debit balances |
eOption is a specialized brokerage platform with a strong emphasis on Options trading. While the company charges $1.99 per trade (unlike some brokers that charge $0), its competitive edge lies in the exceptionally low 10 cents per contract fee, making it cost-effective for traders executing four or more contracts.
eOption also extends its cost-effective approach to stock and ETF trades by offering zero-commission trades. Notably, the minimum investment requirement has been lowered to $0, enhancing accessibility for traders.
A unique feature of eOption is its target audience of investors who employ automated trading based on newsletter recommendations. Subscribers can authorize eOption to execute suggested trades automatically, with the flexibility to set trade parameters. While this approach has merits, it involves limited review time before trade execution.
eOption also provides a valuable paper trading tool, accessible even to non-clients, granting users $100,000 in virtual funds for research, strategy testing, portfolio monitoring, and watchlist creation.
Key features
Low trading fees with a competitive per-contract cost
Zero-commission stock and ETF trades
Automated trading based on newsletter suggestions
Free paper trading tool for research and strategy testing
Interactive Brokers - best for international traders
| Parameter | Interactive Brokers |
|---|---|
Fees |
$0.65 fee per contract |
Minimum deposit |
Nil |
Fees class |
Low |
Deposit method |
Bank Transfer, Credit and Debit cards |
Withdrawal method |
Bank Transfer, Credit and Debit cards |
Withdrawal fee |
First withdrawal is free, after that there is a charge |
Time to open account |
1 day |
Inactivity fees |
Nil |
Interactive Brokers (IBKR) is a top choice for seasoned Options traders, renowned for its advanced tools and international reach, serving traders in over 200 countries. IBKR offers Options commissions ranging from USD 0.15 to USD 0.65 per US Options contract.
One of IBKR's standout features is its Trader Workstation, equipped with cutting-edge trading tools, advanced charting, and real-time market data. Traders can access major foreign stock markets, widening their investment opportunities.
Additionally, IBKR's automation capabilities empower traders to automate their Options strategies fully. The platform is compatible with third-party tools, including trading bots and algorithms, enhancing customization.
Key features
Advanced trading tools and charting via Trader Workstation
Automation capabilities for Options strategies
Compatibility with third-party tools and algorithms
Low Options commissions and margin rates
Extensive range of trading vehicles and global markets
DEGIRO - best in EU
| Parameter | Degiro |
|---|---|
Fees |
$0.75 per contract |
Minimum deposit |
Nil |
Fees class |
Low |
Deposit method |
Bank Transfer |
Withdrawal method |
Bank Transfer |
Withdrawal fee |
Degiro charges $0 for withdrawal |
Time to open account |
Signing up just takes 15 minutes on average, while the approval of your account could take 1 day |
Inactivity fees |
Nil |
DEGIRO stands out as a reliable intermediary for traders seeking access to major global exchanges. Investors can explore a diverse range of assets, including stocks, bonds, ETFs, investment funds, and options, across North America, Europe, Asia, and Oceania stock markets.
DEGIRO distinguishes itself with low trading fees, multiple licenses, and an extensive asset selection. The platform offers real-time transaction monitoring, ensuring an efficient trading experience. Investors are also reassured of data security and asset protection by the firm, as it prioritizes a secure trading environment.
Key features
DEGIRO WebTrader with intuitive design and real-time market updates
Security features include Face ID, Touch ID login, and 2-factor authentication
Access to stock-specific news and fundamental analysis tools
Analysts' insights on stocks
Real-time quotes for informed decision-making
Secure deposits and withdrawals
TD Ameritrade - ideal for professionals
| Parameter | TD Ameritrade |
|---|---|
Fees |
$0.65 per contract |
Minimum deposit |
$0 |
Fees class |
Low |
Deposit method |
Bank deposit (ACH), wire transfer, check, and mobile check deposit |
Withdrawal method |
Bank transfer |
Withdrawal fee |
Nil |
Inactivity fees |
Nil |
TD Ameritrade caters to both novice and seasoned Options traders with its comprehensive desktop, web, and mobile trading tools. Offering more than typical Options brokers, it stands out as a trusted and feature-rich platform.
Users get to access options statistics, probabilities, the Sizzle Index, and the Analyze Tab to make informed trading choices. In addition, TD Ameritrade provides extensive trading education, community forums, and charges an industry-standard fee of $0.65 for online trading, with a commission of $6.95 for OTC trades.
Key features
Options trading in IRA accounts for qualified investors
Strategy Roller automates strategies using pre-defined criteria
Availability of future Options
Portfolio margin trading
No trade minimums
Customizable trading experience
Risk-free paper trading
Advanced trade analytics with technical studies and charts
Phone-assisted and broker-assisted trading available
CapTrader - regulated broker with variety of assets
| Parameter | CapTrader |
|---|---|
Fees |
$3.5 per contract |
Minimum deposit |
$2,000 |
Fees class |
Low |
Deposit method |
Bank transfer |
Withdrawal method |
Bank transfer |
Withdrawal fee |
Nil |
Inactivity fees |
$1/month for portfolios that are both, below $1,000 and no trades have been carried out during the month |
CapTrader, a Forex and CFD trading broker, serves both individual and institutional clients. Regulated by the German Federal Financial Supervisory Authority (BaFin), CapTrader is an introducing broker associated with Interactive Brokers. It offers over 1.2 million trading products, including stocks, Forex, CFDs, Options, futures, ETFs, and bonds. Clients can select from various synchronized trading platforms, such as Trader Workstation (TWS), WebTrader, and Mobile Trader. CapTrader also extends access to the AgenaTrader platform for active customers and FIX API for institutional clients.
Key features
Over 24 years in the market
More than 70,000 trading instruments
Access to over 145 markets
Diverse trading platforms, including TWS, WebTrader, and Mobile Trader
Institutional clients can utilize FIX API for trading
Webull - commission free trading with advanced market data
| Parameter | Webull |
|---|---|
Fees |
$0.55 per contract |
Minimum deposit |
$0 |
Fees class |
Low |
Deposit method |
Bank deposit, wire transfer, and micro-deposit verification |
Withdrawal method |
Bank transfer |
Withdrawal fee |
Nil |
Inactivity fees |
Nil |
Webull has rapidly grown into one of the largest stock and options trading platforms globally, boasting over 11 million users. A standout feature is commission-free trading, including options. The mobile app offers a comprehensive suite of tools for Options trading, portfolio tracking, paper trading, and more. Unique features include mobile voice commands for trading, advanced order options, and Level 1 and Level 2 market data.
Key features
Commission-free Options trading
Mobile voice commands for trading
Advanced order types, including stop-loss and OCO orders
Access to Level 1 and Level 2 market data
A community for traders to discuss strategies and market trends
Free stocks upon deposit
Options trading basics – Quick brush-up
Options trading is a financial practice where investors engage in the buying and selling of Options contracts. These contracts grant the holder the right, but not the obligation, to either purchase or sell a predefined bundle of underlying securities at a predetermined price, within a specified time frame.
An option, in essence, is a binding agreement associated with an underlying asset, like stocks or other securities, and is valid for a predefined duration. What sets Opti ons apart is their flexibility, as they provide investors with the choice to act upon their contract under specific conditions.
Call Options
With call Options, the contract holder has the privilege to buy a particular amount of the underlying asset at a predetermined price before the contract's expiration date.
Put Options
Conversely, put Options offer the contract holder the right to sell a specified amount of the underlying asset at a predetermined price prior to the contract's expiration. These Options are actively traded on various platforms and brokers for both speculative purposes and strategic bets on future price movements.
It's essential to recognize that Options derive their value from the performance of underlying assets, which can encompass stocks, futures, cryptocurrencies, ETFs, equities, and more. Because of this reliance on underlying assets, Options are classified as derivatives. Consequently, the value of an Options contract linked to a specific asset is poised to rise if the price of that asset is expected to increase, often influenced by anticipated future events.
How does Options trading work?
Options trading involves a deep understanding of how to assess the potential value of Options contracts. Traders achieve this by examining the likelihood of future price movements, which can be determined through fundamental and technical analyses.
As an Options contract approaches its expiration date, its value tends to decrease. This is because as time passes, the chances of significant price changes diminish. Conversely, the duration of an Options contract plays a pivotal role in its worth. A three-month option, for instance, may hold greater value than a one-month contract. This is because a longer time frame provides more opportunities for price movements in your favor. However, Options can become inefficient if the underlying asset's price remains stagnant.
The cost of Options contracts, often referred to as "strikes”, tends to rise with longer contract durations. This effect becomes more pronounced when there is little to no movement in the price of the underlying asset.
Options also become more expensive when the underlying assets exhibit increased volatility. This is due to the higher likelihood of substantial price swings in both upward and downward directions, which enhances the potential outcomes for call and put Options.
The price of an option, known as the premium, can be thought of as a combination of its intrinsic and extrinsic values. The intrinsic value of a call option is the amount by which the stock or asset's market price exceeds the strike price. This intrinsic value is a crucial factor in determining the overall premium of an option.
What are the types of Options?
Options trading offers various ways for investors to take advantage of price movements in the financial markets. Two primary types of Options, calls and puts, serve distinct purposes in hedging and speculating on asset prices.
1) Calls
A call option becomes more valuable when the price of the underlying asset or security rises. It allows the holder to speculate on an increase in the asset's value. Here's how it works:
Premium payment – A trader pays a premium to acquire the right to purchase the contract at a specific strike price on (or before – for American options) the expiration date
Profit potential – If the market price of the underlying asset increases, the trader can still buy it at the agreed strike price by paying the premium. The difference between the market price and the strike price becomes their profit
Expiry consideration – If the contract reaches its expiration date, and the market price hasn't risen enough to justify exercising the option, the trader pays the market price to acquire the asset. In either case, the seller keeps the premium paid by the buyer. If the market price falls, the buyer's loss is limited to the premium they paid
2) Puts
Put Options, on the other hand, work in the opposite direction and are useful for hedging or betting on declining asset prices. Here's how they function:
Price-decrease profit – A long put option benefits from a decrease in the underlying asset's price. It provides a trader with the opportunity to profit from falling prices
Protective put – Traders can use a protective put to establish a price floor for their investments, thus hedging against potential losses
Exercising the option – If the market price of the underlying asset falls within the strike price on the expiry date, the trader can exercise the put option, selling the contract at the strike price. This results in a profit
Premium loss – If the market price doesn't drop as expected, the trader incurs a loss equivalent to the premium paid for the right to sell the contract
Options trading terms that you know
Options trading involves a unique set of terms and jargon that every trader should be familiar with. Here are some essential terms you need to know:
1) Strike price (Exercise price)
This is the price at which the Options contract can be exercised. It's the level at which you can buy (for call Options) or sell (for put Options) the underlying asset.
2) Time value
Time value is the part of the option premium that corresponds to the remaining time until the contract's expiration. It represents the potential for the option to gain value before it expires.
3) Spot price
The spot price is the current market price of the underlying asset. It serves as a reference point for determining whether an option is in the money (profitable) or out of the money (not profitable).
4) Premium
The premium is the total cost of purchasing an Options contract. It consists of two components: the time value and any positive difference between the spot price and the strike price. This is what you pay to enter into the Options contract.
5) Break-even level
The break-even level is the point at which an Options trade neither gains nor loses value. For call Options, it's the spot price plus any time value, and for put Options, it's the spot price minus any time value. Crossing this threshold determines whether an Options trade becomes profitable or not.
Pros and cons of Options trading
Options trading offers a range of benefits and drawbacks, making it essential for traders to weigh these pros and cons before venturing into this dynamic market in 2023.
👍 Pros
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1) No need for physical assets
Unlike traditional investing, Options trading doesn't require you to purchase actual assets or stocks in the underlying commodity. Instead, you open a financial contract that allows you to speculate on whether the asset's value will rise or fall within a specified time frame
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2) Hedging possibilities
Options can serve as a valuable hedging tool. They act as a safety net, limiting potential losses if your other open positions start to lose value
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3) High return potential
Options trading can deliver substantial returns, often surpassing those from straightforward stock investments. When the right strike is chosen, Options can yield profits equal to buying actual shares, but with the advantage of lower margin requirements, resulting in significantly higher percentage returns
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4) Versatile strategies
The Options market offers a plethora of trading strategies. By combining call and put Options with varying expiries and strike prices, traders can create sophisticated positions to achieve their financial goals
👎 Cons
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1) Limited asset variety
Options trading may not provide as diverse a range of assets as traditional markets. This limitation means you have fewer choices when entering into financial contracts
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2) Risk of loss
Despite risk-reduction strategies, Options trading can lead to significant financial losses if not managed properly. It's crucial to have a solid understanding of risk management techniques
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3) Liquidity challenges
Some stock Options suffer from low liquidity, making it challenging for traders to enter and exit positions swiftly. Liquidity issues can impact trade execution and pricing
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4) High commissions
Compared to other forms of trading, Options trading tends to be more expensive. Many full-service brokers charge higher fees for Options trading, although discount brokers offer cost-effective alternatives for traders looking to minimize commissions
How to get started with Options trading?
Entering the world of Options trading requires a systematic approach to ensure a solid foundation. Here are the essential steps to kickstart your Options trading journey.
1) Educate yourself about Options
Before diving into Options trading, it's crucial to gain a comprehensive understanding of Options strategies and their associated risk profiles. This knowledge equips you to formulate informed market views and make strategic decisions. You can enhance your expertise by enrolling in an Options trading course, reading books on the subject, or accessing online educational resources.
2) Find a broker offering Options trading
To trade Options, you'll need a brokerage that provides access to Options markets. It's advisable to choose a broker that not only offers Options trading but also provides valuable insights and execution support. Some brokerage firms collaborate closely with clients to offer guidance on Options strategies and facilitate trade execution.
3) Open an Options trading account
Opening an Options trading account is a pivotal step, and it often requires a higher initial capital compared to a standard brokerage account for stock trading. Due to the intricate nature of Options trading, brokers may request additional information and ensure that you possess the necessary knowledge and experience to engage in Options trading safely.
4) Select the appropriate Options
Once your Options trading account is set up, you can start choosing which Options to buy or sell. There is a wide array of strategies to consider, including buying calls, buying puts, selling covered calls, and acquiring protective puts. Your choice of strategy should align with your market outlook and risk tolerance.
5) Develop a comprehensive plan
To excel in Options trading, consider developing a comprehensive plan. This plan can include taking an Options trading course, reading relevant articles, watching tutorial videos, and even seeking guidance from an experienced Options trading mentor. Many online Options brokers also provide their own guides and resources to assist traders in making informed decisions.
Tips to choose the best broker for Options trading
Choosing the best broker for Options trading is a crucial decision that can significantly impact your trading experience. Here are some essential tips to help you make an informed choice.
1) Fee structure
Opt for a broker with a cost-effective fee structure. The best Options brokers typically offer low or even no Options contract fees, do not charge trading commissions, and provide competitive margin rates. This ensures that your trading costs remain manageable, allowing you to maximize your returns.
2) Trading tools
Look for brokers that provide high-quality trading tools designed specifically for Options trading. These tools should include Options chains, Options calculators, and Options trading simulators. Having access to these resources enhances your ability to analyze and execute trades effectively.
3) Research and education
The best brokers go beyond providing a trading platform; they offer a wealth of research and educational materials. This support is valuable for traders of all levels, from beginners to advanced investors. Look for brokers that provide comprehensive resources to help you enhance your trading knowledge and skills.
4) Customer service
Reliable customer service is essential when selecting an Options trading broker. Ensure the broker offers responsive support through phone, email, and live chat. A broker with excellent customer service can assist you in resolving issues promptly and provide valuable assistance when needed.
5) Platform and technology
Evaluate the broker's trading platform and technology. It should be user-friendly, intuitive, and equipped with advanced features. Features to look for include real-time quotes, charting tools, customizable dashboards, and order execution capabilities. A robust trading platform enhances your efficiency and overall trading experience.
6) Regulation and safety
Prioritize safety by choosing a broker that is regulated by reputable financial authorities. Regulatory oversight ensures that the broker adheres to industry standards and safeguards your investments. Additionally, assess the safety measures the broker implements to protect your account and personal information from potential threats.
7) Reputation and reviews
Do your due diligence by researching the broker's reputation and reading reviews from other Options traders. A broker with a positive reputation and favorable reviews is more likely to provide a reliable and satisfactory trading experience. Consider feedback from other traders to gain insights into the broker's strengths and weaknesses.
Best Options Trading Platforms by Countries
FAQs
Which option trading is best?
The best option trading strategy depends on your financial goals and risk tolerance. There is no one-fits-all answer to this question.
Which broker is best for future and option?
The best broker for futures and Options trading may vary based on individual preferences, but some popular Options include TD Ameritrade, eToro, and Interactive Brokers.
Which stock has the highest option trading?
Stocks with high liquidity and trading volumes typically have the highest Options trading activity.
Which broker has the lowest charges for F&O?
Brokers' charges for futures and Options (F&O) trading can vary, but some brokers known for competitive pricing include Degiro and TD Ameritrade.
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Team that worked on the article
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.
As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.
Dr. BJ Johnson is a PhD in English Language and an editor with over 15 years of experience. He earned his degree in English Language in the U.S and the UK. In 2020, Dr. Johnson joined the Traders Union team. Since then, he has created over 100 exclusive articles and edited over 300 articles of other authors.
The topics he covers include trading signals, cryptocurrencies, Forex brokers, stock brokers, expert advisors, binary options. He has also worked on the ratings of brokers and many other materials.
Dr. BJ Johnson’s motto: It always seems impossible until it’s done. You can do it.
Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO). Mirjan is a cryptocurrency and stock trader. This deep understanding of the finance sector allows her to create informative and engaging content that helps readers easily navigate the complexities of the crypto world.