What Platforms Can You Trade Options on

Introduction

Options trading has been attractive and valuable to online brokers because of its profitability. You can use options to generate income and hedge your risk. You can also use them to add more fuel to your portfolio by easily increasing your exposure to specific stocks and indexes.

Also, options have come to be considerably more prominent with the coronavirus pandemic causing ripples across stock markets worldwide.

As an options trader, you know that trading platforms form the vital bridge between you and your chosen financial market. So, whether you are interested in forex, stocks, commodities, or options, you have to find a suitable trading platform to meet your needs.

However, as options trading is inherently more complex and tricky than simply buying funds or stocks, you often have to be more selective and careful in choosing the right trading platform or brokerage. Did you know that many brokerage platforms provide you with similar feature sets? This makes it difficult for traders to choose one platform over another.  

When it comes to options trading, one deciding factor is usually the amount of commissions you will have to pay. Note that some platforms have a single fixed rate. On the other hand, some offer discount volume trading. Similarly, while many trading platforms and brokerages have higher payouts, others may have higher deposit bonuses. This is why picking the right trading platform can be tricky, particularly for beginners.

It is worth noting that options trading gained considerable traction over the last five years, especially with retail investors. To respond to this increased demand, the best options trading platforms now provide features once only available to professionals, combining fantastic trading tools with low commissions and top-quality research features.

As a result, beginner investors and advanced traders can easily trade with options confidently because of the risk management analysis tools that most brokers offer.

Below, we will take a look at the top choices for trading platform

TD Ameritrade

If you would like to get started trading options, there’s no better place to trade than TD Ameritrade. Did you know that TD Ameritrade’s $0 account minimum helps make the platform accessible to all options traders? The best thing is that TD Ameritrade offers you a full-service and convenient online broker experience. This makes it an ideal fit for beginner and advanced investors.

Keep in mind that the Trade Architect platform is excellent as it provides a simple, quick-to-navigate trading environment, which is not intimidating for new options traders. It also provides simple order execution.

If you are new to options trading, you will be able to get started easily on TD Ameritrade’s application or website by using its simple and intuitive thinkorswim platform. Also, with amazing educational content and tools, traders can access live coaching for trading options as well. Options trading costs or fees at TD Ameritrade are quite similar to comparable brokers, and there is no base commission only a fee of $0.65 per contract.

Did you know that the platform also provides virtual trading? As a result, beginners can easily get a feel for the options market without putting real funds at risk. 

On the other hand, for more advanced options traders, the thinkorswim platform offers professional-grade option trading features, like Options Statistics, to identify trading opportunities as well as the Sizzle Index to identify the hottest contracts.

These options traders can use the thinkorswim platform in order to study various options strategies and set up rolling spreads to future or potential expiration dates and assess risk. And inexperienced traders can use the website to access educational tools to understand more complicated spreads. 

Pros

• Charges just $0.65 per options contract
• Offers free per-leg options trading without any commissions in the US
• Valuable and incredible webcasts available for options trading on TDAmeritradeNetwork.com
• Insightful educational tools and materials for learning complex spreads
• Use trading simulator for practicing trades

Cons

• High margin interest rate

Robinhood

Did you know that Robinhood is a relatively new platform that changed the game when it popularized a no-commission approach to ETFs, stocks, and options trades? And that is not all; you also do not need to have a specific account minimum in order to sign up for Robinhood. The platform is completely mobile-first.

With over 13 million users with an average age of 31, there is no doubt that Robinhood has positioned itself in the market to be suitable for younger option investors who would like to get their skin in the game.

While its relative lack of educational materials and resources makes it a better fit for experienced and confident options investors who can perform their research elsewhere, it is hard to argue with the platform’s pricing model. Sign up on Robinhood to get a free stock.

And since Robinhood expanded its options trading platform, it has become one of the best choices for options traders.

Pros

• No commissions on options
• Very straightforward to use
• A streamlined and intuitive mobile application
• Excellent for new investors that only want specific options

Cons

• Limited educational and research resources
• The app doesn't have a great support team and sometimes does not work properly

Webull

Webull is another commission-free online brokerage platform that, like Robinhood, doesn’t charge options contract fees. You will be happy to know that Webull offers you a unique community experience as well as simple-to-use trading platforms. 

Designed for active and globally-minded options traders, the platform boasts an impressive and unique array of analytic tools. Moreover, it offers extended trading hours for night owls looking to make the most of news and market moves in international markets. You will also benefit from impressive screening tools, and these tools will help hone your risk-management strategies.

Webull is comprehensive and offers stocks, options, ETFs, and the amazing ability to trade fractional shares and even sell shares short. For options trading, if you trade one options contract (at least) per month on Webull, you will also get real-time options data. So, sign up now.

The platform's no-cost model is appealing to active traders. And in particular, Webull's free options trading has captured the attention of active options traders. This is because other brokerage platforms, even those with free stock and ETF trades such as Schwab, still charge commissions on each leg of options trades.  

Pros

• No commission on ETFs and stocks and US-listed options
• Simple and hassle-free account setup and quick options approval
• Access to pre-market trading and extended hours
• Intuitive and sleek trading platform with powerful functionality

Cons

• The platform is not as robust as a few other options-focused competitors
• Limited range of portfolio management tools

E*TRADE 

There is no doubt that E*Trade is a popular and reliable trading platform that has transitioned itself well into a strong options trading platform. E*TRADE has a dedicated mobile application.

E*TRADE’s Power E*TRADE platform as well as mobile application are considered the gold standards of option trading platforms. The best thing is that Power E*TRADE currently provides traders with premium-quality tools without charging a premium price tag.

Did you know that active traders enjoy a very low 50-cent-per-contract price on ETF or stock options when they make a minimum of 30 trades a quarter, or 65 cents each, for less frequent trades? Also, E*Trade does not charge when you close an equity option priced at ten cents or less.

As the leader in the online brokerage industry, note that E*TRADE has positioned itself well as one of the most reliable online platforms for trading options. As a result, it is a solid and well-rounded pick for any options investor, from novice investors to advanced traders. E*Trade supports many advanced options strategies like butterflies, iron butterflies, condors, and iron condors, naked calls, and naked puts. However, you need the approval to access these riskier options strategies.

Pros

• Options are between $0.50 and $0.65 per contract, depending on your trading volume
• Forecasting and charting tools available on Power E*Trade platform
• Dedicated customer support helpline for options
• Customizable options chains and trading ladders

Cons

• Multi-leg spreads incur an extra base commission charge
• High margin rates

Which Platform Should You Choose?

Keep in mind that deciding which platform to choose for options trading usually boils down to three factors: these are commissions, features, and customer service availability. For example, for options traders who trade more frequently (more than thirty trades per month), Ally Invest and E*TRADE offer volume discounts.  

Remember that low commissions are only the tip of the iceberg when deciding on the best options trading platform. As a trader, you also need to consider various hidden fees, like data fees and platform fees. Also, different traders have different and unique skill levels, trading strategies, as well as needs. As options trading can be quite complicated, beginners should find a trading platform with plenty of helpful educational resources and guidance.

You have to weigh your own preferences before opening a brokerage account of your own. For instance, Robinhood charges no commissions for options trades; however, the platform is very thin on functionality and features. This makes it suitable for options investors who do not necessarily need plenty of educational resources and simply want to dabble in basic put and call trades. In contrast, a platform like E*TRADE charges commissions; however, it is packed with resources and features, which could be worth considerably more than the commission costs for some investors.

Here are some features and variables that can be considered “make or break” for your decision.

Fees and Commissions 

While price is not everything, the amount you pay in order to make a trade will eventually play through to your profit or loss. And it makes little sense to place or execute an options trade where the only likely winner is the relevant brokerage firm.

Keep in mind that commissions have declined quite a bit in the last couple of years, and many online platforms offer commission-free trading on options and stocks. However, there are still quite a few differences within the financial industry when it comes to options.

Preferences

Remember that an options trading platform usually has more to do with personal preferences than anything else. This is because placing an options trade through any brokerage platform is often a matter of a couple of clicks.  

Sophisticated options traders might find missing features or nuances with certain brokerages. It is unlikely that any one platform will offer you everything that you want. However, most traders will offer the most features and functionalities requested by options traders.

For example, some options traders might see a full-featured platform as an asset. On the other hand, beginning investors might see the complicated interface as a liability.

Resources

This is another key factor. Many platforms offer you a complete range of educational resources. This can be very valuable for investors and traders who are new to options. This is important as options can be quite complex financial instruments, and it’s pretty easy to lose plenty of money if you do not know and understand what you are doing.

What Type of Options Trader are You?

It is no secret that the first and most crucial information you should consider before choosing an options trading platform is what type of trader you are. For example, what is your specific trading style and risk appetite or risk tolerance? Which tools and features would you like to have handy? This means that if you are getting started with options trading, then the help and the quality of education provided by your broker are important.

On the other hand, if you are a frequent trader, you will be more sensitive to fees and commissions. This is why it is important to check out your prospective platform's charges and ensure that you understand them.

Final Thoughts 

With several trading platforms on the market, note that finding a suitable provider is often a time-consuming process. You will invest your hard-earned money. As a result, you have to be 100% confident that the trading platform you choose is best for you and your specific financial goals and objectives. Usually, options are pretty advanced for many traders; however, they can be quite profitable if you understand how to bet and spread the market.

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