8 Best Forex Options Brokers For 2024

AvaTrade – Best Trading Platform for OTC Options

AvaTrade Review

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71% of retail investor accounts lose money when trading CFDs with this provider.

Formed in 2006, AvaTrade is one of the most reputable, and trusted trading platforms. The platform won lots of awards, has excellent customer support, and has a demo trading account. There are over 40 currency pairs available as spot contracts of CFDs. Suitable education materials and low commissions and fees make AvaTrade a great all-around option.

Fidelity FX – Best Choice for Exotic Currency Pairs

Fidelity Review

Fidelity FX started in 1946. They offer 190 currency pairs but only 16 online. To access the forex pairs that you won’t get at other brokers, you’ll need to call up a Fidelity broker.

The platform places a big emphasis on education. As such, it provides great materials to help traders constantly learn. The trading tools they offer are pretty sophisticated too. Low trading fees and no minimum deposit are two other attractive features.

Saxo Bank – Most Trusted FX Options brokers in Europe

Saxo Bank Review

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Formed in 1992, Saxo Bank is a deeply respected European broker. They offer over 180 Forex pairs that can be traded as CFDs and spot contracts. Saxo Bank is commission-free and makes its money from the spreads. Fortunately, these spreads are very competitive.

Saxo Bank’s trading software is top of the line and very easy to use. Finally, they offer very comprehensive research capabilities and good educational materials.

Saxo Bank requires an account minimum of $2000.

TD Ameritrade FX – Best for Currency ETFs and Exchange-Traded Forex Futures

TD Ameritrade Review

TD Ameritrade was formed in 1975. It has an excellent reputation as a trusted broker. It offers over 70 different forex pairs. TD Ameritrade is commission-free, but the spreads are slightly higher than other brokers on this list.

Ameritrade’s web and desktop platform, Thinkorswim, will take beginners a little time to get the hang of. However, it’s worth the time investment for its excellent charting and other advanced features.

How Do Forex Options Work?

Forex options are contracts that give buyers the right — but not the obligation — to buy or sell currencies at a defined exchange rate on or before an agreed date. Buyers pay a premium for this right.

This process allows users to lock in a price on, for example, a currency they believe will rise in price. If the buyer’s market hypothesis is true, they can make money by buying the currency at the lower rate they locked in, even though it is now priced higher.

What are Forex Put and Call Options?

A put option gives the buyer the right to sell a specific currency.

A call option gives the buyer the right to buy a specific currency.

Basic Options Trading Terms

There are many terms associated with forex trading, some that you need to be familiar with to understand the concept. Some that you may hear a lot are terms such as 'put,' 'call,' and 'strike.' To make things easier, we've defined some of these key terms below for you:

Call = Call options give the holder the right to buy an asset at a specific price known as the strike price.

Put = Put options give the holder the right to sell an asset. This gives the holder the right to sell the shares at a specific price by a certain date.

Strike = A strike price is a price that a holder of an options contract can buy or sell a currency if they exercise their option contract. Strike prices are only valid until the contract’s expiration date.

Basic FX Options Strategies

#1. Covered Call

With calls, a simple strategy is to buy a naked call option. This strategy is very popular, especially amongst beginners, because it generates income and reduces the risk of being long on the currency alone. The downside is that you must be willing to sell your shares at a set price.

To do this, you purchase the underlying asset, as normal, and simultaneously write a call option on those same shares. Investors may choose this strategy if they have a short-term position in the asset and a neutral opinion on its direction. It's possible they may be looking to generate income through the sale of the call premium.

Because the investor would receive a premium from selling the call, as the moves through its strike price, the premium they receive allows them to sell their asset at a higher level than the strike price.

#2. Married Put

Within a married put strategy, an investor would purchase an asset and simultaneously purchase put options for an equivalent number of shares. The holder of this put option has the right to sell asset at its strike price.

An investor would choose this strategy as a way of protecting their downside risk when holding an asset. This strategy is reminiscent of an insurance policy. It establishes a price floor in case the assets price falls sharply.

#3. Bull Call Spread

In this strategy, an inventory simultaneously buys calls at a specific strike price while simultaneously selling the same number of calls but at a higher strike price. Both options will have the same expiration date and asset.

This type of vertical spread strategy is used when investors are bullish on the underlying asset and expect a moderate rise in the asset price. This strategy is beneficial as investors can limit their upside on the trade while also reducing the net premium spent.

Are Forex Options Trading Legit?

The forex market is a legitimate trading market where the world's currencies are traded. It is not a scam. Without the forex market, it would be challenging to trade currencies needed to buy imports, sell exports and go on holiday!

Generally speaking, forex options trading is legal. However, some countries have restrictions on trade. In the following countries, options trading is unavailable:

When trying to sign up to forex trading organizations from any of the above countries, you may be met with the message, "X company does not accept traders from this country."

Should I Trade FX Options?

Although forex trading has its risks, it also reaps many attractive benefits which should be weighed up when considering if you should trade:

It's a large and global market

Forex trading's size and scale is possibly the most attractive benefit it has. To put its sheer size into perspective, $4 trillion is exchanged on average per day. Traders worldwide buy and sell currency at all hours, making Forex the marketplace with the most scope for profitability.

It's perfect for beginners

As mentioned previously, accessibility is one of the most considerable advantages. It is relatively easy to enter and does not require a large initial investment compared to other markets. However, it's important to remember that any kind of training involves some level of knowledge and skill.

You can trade 24 hours a day

Forex trading takes place OTC, meaning transactions are made directly between parties. Because of this, it is not restricted by any opening hours. Deals can take place anytime, anywhere.

Low transaction costs

Alongside having little capital for entry, the transaction costs are typically relatively low once a trader is in. Usually, brokers make money from spreads measured in pips and factored into the price of a currency pair.

High liquidity

Liquidity refers to how easily an asset can be bought or sold without affecting its value. With forex trading, you can easily exchange your assets with slight variance to their value.