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Options can be used to generate income, hedge your risk or add more fuel to your portfolio by increasing your exposure to a particular stock or index. But options trading is more complicated than just buying stocks or funds, so options traders need to be more selective when it comes to choosing the right options trading platform. In the guide below, we share our top picks for the best options trading platforms and what you should look for when choosing an options trading platform.
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Robinhood is an efficient options trading platform that ranks as one of the cheapest options brokers. Commission-free options trading enables commission-free trading of stocks, ETFs, fractional shares and cryptocurrencies.
While the active trader caters to a wide variety of options trading platforms, it also caters to long-term investors with thousands of mutual funds and ETFs that can be traded without commission.
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It offers low option trading fees per contract, $0 per share commission, and $0 account minimum.
No cost is the name of the game with SoFi, and that doesn’t change when it comes to options. Here is SoFi’s list of free options trading and other industry leading features.
One of the best option trading platforms for active traders and cost sensitive investors. If you are willing to do the work to evaluate each of the two commission plans, you can spend less than other options platforms.
Like Robinhood, Webull is essentially a no-fee options broker, charging no commissions or per-contract options trading fees. In addition, the platform is easy to use and only allows you to trade stock options. When considering Robinhood, compare it to Webull.
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Not only is it one of the best options brokers, it stands out as a premium broker with the best tools and comprehensive research.
Competitive base option commissions and tiered pricing per contract put Interactive Brokers on this list. In other words, its powerful feature set and low option trading costs make it a reliable option trading platform.
A true options-first broker is often able to trade stocks, ETFs, and futures. What stands out is the option trading platform and the commission structure.
TD Ameritrade, while not the cheapest platform for options traders, is one of the most feature-rich. The Thinkorswim desktop platform offers unmatched trading tools, and the mobile platform enables complex options trading even on the go. Research from Credit Suisse and Morningstar helps traders make informed choices.
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Options trading is commission-free on E*TRADE, but there is a standard fee of $0.65/contract. This fee makes E*TRADE more expensive than some competitors, but for active investors who trade at least 30 options per quarter, the brokerage lowers the rate to $0.50 per contract. E*TRADE also offers a variety of trading tools, especially on the free Power E*TRADE platform, which is popular with options traders.
Unlike most competitors, Robinhood does not charge contract fees for options trading. There are also no commissions, making Robinhood the cheapest platform for trading options. Although not the most feature-rich platform, Robinhood offers mobile trading, so you can buy and sell options contracts from any device.
Like most brokerage firms, Ally does not charge commissions for trading options. It has a fee of $0.50 per contract, which is cheaper than some alternatives. Ally has no minimum investment and no maintenance fees, making it a great option for option traders who don’t have a lot of cash.
TradeStation is not the cheapest platform for options traders, with users paying $0.60 per contract. But the additional cost is still affordable and easily justified as it includes access to TradeStation’s feature-rich desktop platform.
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Webull is a great option for option traders looking for the cheapest platform. It differs from most competitors because there are no contracts or commissions. Webbull offers an intuitive and easy-to-use trading platform, especially rich in mobile software that can be used on all your devices.
Interactive brokers charge a variable fee per contract when trading options, and the price depends on the size of the trade. This makes it a good option for investors with deeper pockets and access to lower prices. Its WorkStation platform is a powerful trading platform full of features that options traders love.
Tastytrade, formerly known as tastyworks, is one of the only brokerage firms focused on options traders. It offers the lowest fees in the options trading industry and only charges commissions when positions are opened. The trading platform offers the best technologies designed by the team that pioneered options trading, making it the ideal choice for active traders.
A key thing to keep in mind is that there is no best option trading platform for everyone, and you should consider the costs and features before opening a brokerage account.
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For example, Robinhood has no commissions for options trading, but its platform is so light in functionality and features that it is perfect for investors who do not need educational resources and just want to make basic calls and trades. On the other hand, option brokers like E*TRADE charge commissions, but for many investors they are full of features and resources that are worth much more than the cost of commissions.
When you choose one of our top-rated brokers, you need to be sure that you are buying the right stock. We think there’s no better place to start than with Stock Advisor, our company’s stock-picking service, The Motley Fool. You’ll get two new stock picks every month, plus 10 starter stocks and best buys now. Over the past 21 years, Stock Advisor’s average stock has returned 373%, more than 3x the S&P 500! (As of March 10, 2023). Learn more and enjoy exclusive new member discounts today.
Options traders require more options trading platforms than those that simply enter the market or limit stock orders. Active options traders can rank options brokers based on their choice of calculator or screener, while the infrequent option user only cares about commissions.
Below are some of the features that can be considered “make or break” when choosing the best trading platform.
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Options trading commissions and fees can vary widely, even among the best options trading platforms, and the differences can really add up. Here’s a look at options trading costs and how much our top brokers charge for options trading.
Most of the best options brokers charge a flat commission for online stock and options trading and a small commission for some options trading. This means that they offer commission-free option trading, but charge a commission based on the number of option contracts traded. Therefore, for most options brokers, trading 50 option contracts is more expensive than trading 10 option contracts.
The most common price point is around $0.65 per contract, but depending on the stock options broker, it can be anywhere from $0 to $1.00. Based on the typical fee of $0.65, a trader would pay $6.50 to buy 10 contracts ($0.65 × 10 = $6.50). To buy 100 contracts, the same trader would pay $65 for the trade.
To be clear, these commissions are for online options trading. Commissions can be even higher if you trade over the phone.
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The table below compares options trading platforms based on the cost of buying and selling 10 option contracts.
While commission-free options trading was once a dream for investors, it is no longer the case for the best options trading platforms that reduce account acquisition and maintenance costs. Here is a comparison of options costs when trading 10 of our top options contracts.
Option brokers sometimes charge a fee when you buy or sell an option, but others charge a fee when you want to exercise the option or when you own the option.
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