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Current market conditions make option trading more attractive than ever. Tighter monetary policy has turned the tide on all market participants, with stocks often falling faster than they rise. This makes it a great time to look for brokers who specialize in options trading. Options give investors the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.
Best Option Trading Broker
We’ve researched and reviewed the best options trading platforms to help investors decide which platform offers the best combination of education, speed, cost, tools, research and more to suit their needs.
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We chose tastytrade (formerly tastyworks) as the overall best because of their highly competitive options trading commissions, excellent options trading tools, and excellent options education and live video content.
Tastytrade was created by the same people who created and developed TD Ameritrade’s excellent thinkorswim® app. The founders were inspired to create a platform that gives proprietary traders access to the markets and sophisticated analytical tools. Tastytrade is intended more for active investors/traders and only offers trading in stocks, ETFs, options and cryptocurrencies.
Tastytrade has very competitive options trading rates. While it charges $1 per contract to open each tranche of an options trade, it caps fees at $10 per tranche for any option trade, regardless of trade size. There is also a contract settlement fee of $0.10. Unlike most brokers, tastytrade does not charge commission for closing positions, resulting in very competitive options trading fees.
For example, opening and closing 50 vertical call lots (a total of 200 contracts exchanged to open and close a position) would only cost $40 at tastytrade – a maximum of $10 per branch for both parts ($20) plus a $0.10 settlement. fee for 200 contracts ($20). For example, the same trade in E*TRADE would cost $100 using their $0.50 fee per contract for higher volume/frequency traders. The same vertical spread trade for 100 contracts will result in fees of $60 for tastytrade ($20 for both legs and $40 for clearing fees) and $200 for E*TRADE. Tastytrade is price competitive for all options traders but becomes more competitive for high volume and high frequency traders.
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Along with these low commissions, the tasty trade does not lack options analyst, platform workflow or trading inputs. Tastytrade’s powerful options analytics include Greeks for specific multi-leg strategies, profit charts for option positions, and easy order entry that automatically sets up a trade structure when specific option strategies such as vertical spread or butterfly are intuitively selected. drop down menu. From there, it is easy to change the expiration date and strike price for the selected option strategy. The platform also provides odds on the potential profitability of various option strategies.
Tastytrade’s desktop and mobile platforms are designed to resemble each other in look and feel for consistency, although some things may need to be adjusted to account for the smaller screen size of the mobile app. While tastytrade provides real-time streaming offers, it does not provide fundamental research or live news. Tastytrade offers a Follow Traders feature that allows users to follow celebrity trades internally. Tastytrade’s customer service is well rated by customers for fast and capable support, with Trustpilot showing a 4.7/excellent rating from over 300 reviews.
We selected TD Ameritrade to win the mobile category primarily based on the strength of the exceptional analytics capabilities, research tools and trading tools provided by its thinkorswim® mobile app.
TD Ameritrade is this year’s new Best for Mobile Options Traders winner, beating out last year’s winner, tastytrade. It has been a very close race between the tastytrade and thinkorswim® platforms over the past few years, but tastytrade’s lack of innovation and fundamental research has allowed TD Ameritrade to come out on top.
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TD Ameritrade is a full-service online broker known for excellent educational resources that provide clients with the basics of investing and beyond. The company was founded in 1975 and was bought by Charles Schwab in 2019. TD Ameritrade also offers a wide variety of asset classes and different platforms to meet the needs of all investors, active and passive traders. Although their commissions for options are higher than some other online brokers that focus more on trading stocks and options, having access to a complete set of financial products on one platform can be worth it.
The thinkorswim® desktop application is customizable by the user and generally has more features than the standard web and mobile platforms. That said, TD Ameritrade’s thinkorswim® mobile app makes a decent attempt at replicating its robust desktop version. Thinkorswim® mobile has watchlists, real-time data streaming and supports charting and trading directly from the charts. It does not support the ability to draw trend lines, but the charts still look much better in the thinkorswim® mobile app than in the standard mobile app. As a result, options traders use thinkorswim® mobile as their primary mobile experience.
The mobile version is very similar to thinkorswim® desktop and allows users to trade with more legs. Traders can choose to rely on TD Ameritrade’s order routing technology or route their orders to specific exchanges. Traders also have the ability to reverse trade strategies and set orders to automatically trigger when certain criteria are met.
Like E*TRADE, TD Ameritrade is not specifically an options platform. It has a wider range of offerings and comes with add-ons that include robust customer service capabilities, top-notch educational resources, and tools that go beyond business analysis to assess your overall financial situation. However, in this larger world of offers, thinkorswim® mobile is an exceptional experience for options traders who want to access the markets on the go.
Best Options Trading Platforms Of 2023
Interactive Brokers (IBKR) offers low options commissions, continuous improvements to its already great trading and analytical tools, and a long-term commitment to efficient order execution, making it our first choice for advanced options traders.
Interactive Brokers is this year’s new winner in the advanced options trader category, taking over from last year’s winner, tastytrade. This is because tastytrade does not yet offer news streaming or basic research, and IBKR continues its efforts to build a world-class platform.
The company was founded in 1978 by its current president, Thomas Peterffy, under the name T.P. & Co. The company created the first portable computers used for trading markets and began selling its services to the public in 1993 when Interactive Brokers Inc. was founded as an American broker-dealer. In that time, IBKR has become the clear choice for sophisticated traders, making almost every type of security available in most markets on a single platform.
In 2021, IBKR launched IMPACT, a trading app that matches investors’ values with their investments, and Global Analyst, an online tool that helps investors find undervalued companies. The company has also developed many innovative tools to better analyze and automate the trading process and supports trading opportunities worldwide in more than 30 market centers.
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Interactive Brokers has low option commissions for active traders ranging from $0.15 to $0.65. This means that $0.65 per contract is a commission for clients who trade less than 10,000 contracts per month, so IBKR may be on the high side for lower volume options traders. There are break-even points for trading larger volumes per month, which also vary by premium, but you need to trade more than 100,000 contracts per month to achieve a commission of $0.15 per contract. Interactive Brokers also has excellent execution, allowing its large clients to route their own orders while providing clients with commission-free trading (no options) that comes with pay-per-order flow.
Interactive Brokers has developed some excellent options analysis tools that are also available on the mobile app. These tools include option spread models to easily compare similar strategies and find the one with the best risk/reward profile. IBKR Mobile also has one-click option strategies that allow the trader to make easy changes to multiple strategy branches, as well as display key Greek options on the quote page and allow fine-tuning of strategies by adjusting filters. In addition to option futures spreads, Interactive Brokers also allows traders to exercise all or some of the options and provides useful indicators to help the trader determine whether an initial exercise of the options would be beneficial.
In addition to these tools, Interactive Brokers provides traders with tools to chart potential payouts on option strategies as well as tools to estimate the probability that an option will become profitable. Other option-specific tools at Interactive Brokers include an options entry tool that scans your stock positions and calculates the number of covered options to write against uncovered stocks, and option rollover tools for expiring stock options.
There are also options analytics that allow traders to manipulate option pricing data such as price, time and implied volatility. Furthermore, the Interactive Brokers Options Portfolio continuously and efficiently scans market data to identify them
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