Options can be used to generate income, hedge your risk, or add more fuel to your portfolio by increasing your exposure to certain stocks and indexes. But because options trading is inherently more complex than simply buying stocks or funds, options traders often need to be more selective in choosing the best options trading platform.
In the guide below, we'll share our top picks for the best options trading platforms and what you should look for when choosing the right options broker for you.
3 Featured Picks From Our Best Options Trading Platforms
There are a lot of options to compare, even on this page. It can be overwhelming! If you're looking for a place to start, here are three options trading platforms our experts recommend and why they like them:
- Robinhood: Standout overall options trading platform. Robinhood offers $0 per contract fees on options trading, comes with an easy-to-use interface, and provides a good baseline of information on options trading for anyone who needs it. And all of its features are accessible via the app.
- SoFi Active Investing: Great options trading platform for beginners. SoFi doesn't charge a contract fee, which makes it budget-friendly for the active trader, and the platform has a lot of educational materials for beginners to learn from.
- E*TRADE: Superb for active trading. Options trades are commission-free, and though a standard $0.65/contract fee applies, the rate is discounted to $0.50 per contract for customers who execute at least 30 stock, ETF, or options trades per quarter.
Our eight best platforms for trading options for January 2024
| Broker/Advisor | Best For | Commissions | Next Steps | |
|---|---|---|---|---|
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Commission free options trading | Commission: $0 for stocks, ETFs, options, and cryptocurrencies | |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Low fees | Commission: $0 for stocks, $0 for options contracts | |
Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Options-first trading platform | Commission: $0 for stocks, $1 per option contract (opening trades only) | |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Options app trading | Commission: $0 per options trade, $0.65 per contract ($0.50 per contract for 30 or more stock, option, or ETF trades per quarter). Other fees apply. | |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Low options trading fees | Commission: $0 per options trade, $0.50 per contract | |
Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Active traders | Commission: $0 per options trade, $0.60 per contract | |
Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.0 out of 5 stars. 4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Commission free options trading | Commission: $0 per trade | |
Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Rating image, 4.5 out of 5 stars. 4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Best For: Low option trading fees | Commission: $0 per options trade, $0.15-$0.65 per contract |
How to choose the best options trading platform
One key point to keep in mind is that there's no such thing as the best platform for options trading for everyone, and the costs and features should be weighed with your own preferences in mind before you open a brokerage account of your own.
For example, Robinhood has no commissions for options trades whatsoever, but its platform is very light on functionality and features, which makes it appropriate for investors who don't necessarily need educational resources and just want to dabble in basic call and put trades. On the other hand, an options broker like E*TRADE charges commissions, but is packed with features and resources which could be worth far more than the commission costs for many investors.
Here are some of the main features to consider when picking the best platform to trade options below:
- Commissions-free options trades: While price isn't everything, fees can play a huge role in deciding how much you gain or lose. Many of the best options trading brokers have commission-free options trading but may charge options trading fees per contract.
- Platform usability: Some traders may see a full-featured platform as an asset, while beginner investors may see the complex interface as a liability. Find a platform that fits your specific needs and preferences.
- Educational resources: Many of the best options brokers offer a full range of educational resources, which can be extremely valuable for investors who are new to options.
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OnRobinhood'sSecure Website.
Compare the best options trading platforms
Show The List [+]Hide The List [-]
- Commission free options trading:Robinhood
- Low fees:SoFi Active Investing
- Options-first trading platform:Tastytrade
- Options app trading:E*TRADE
- Low options trading fees:Ally Invest
- Active traders:TradeStation
- Commission free options trading:Webull
- Low option trading fees:Interactive Brokers
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Robinhood is an efficient options trading platform that captures a spot as both one of the cheapest and one of the best options brokers. Commission-free options trading round out a feature set to trade stocks, ETFs, fractional shares, and cryptocurrency without commissions as well.
Fees:
$0 for stocks, ETFs, options, and cryptocurrencies
Account Minimum:
$0
OnRobinhood'sSecure Website.
2023 Award Winner
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
No fees is the name of the game with SoFi and that doesn't change when it comes to options. With fee-free options trading and a slew of other industry leading features, SoFi makes the list here.
Fees:
$0 for stocks, $0 for options contracts
Account Minimum:
$0
Special OfferFor new accounts: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%.
Get up to $1,000 in stock when you fund a new Active Invest account.
Open Account for SoFi Active Investing
OnSoFi Active Investing'sSecure Website.
Our Rating:
Rating image, 4.0 out of 5 stars.
4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
A true options-first broker that sprinkles in the ability to trade mostly stocks, ETFs, and futures. The standouts are its options trading platform and commission structure.
Fees:
$0 for stocks, $1 per option contract (opening trades only)
Account Minimum:
$0
OnTastytrade'sSecure Website.
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Caters to active traders with multiple options trading platforms, while also appealing to long-term investors with thousands of mutual funds and ETFs that can be traded commission-free.
Fees:
$0 per options trade, $0.65 per contract ($0.50 per contract for 30 or more stock, option, or ETF trades per quarter). Other fees apply.
Account Minimum:
$0
Special OfferOpen a new eligible E*TRADE account. Enter promo code ‘BONUS24’ when opening the new account. Use promo code BONUS24 only once for one account. Fund your new account within 60 days of account opening. Cash credits will be granted based on deposits of new funds or securities from external accounts made within 60 days of account opening.
Open and fund and get up to $600 or more.
OnE*TRADE'sSecure Website.
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Impresses with a low option trading fees per contract, while also offering $0 stock commissions and $0 account minimums.
Fees:
$0 per options trade, $0.50 per contract
Account Minimum:
$0
Our Rating:
Rating image, 4.0 out of 5 stars.
4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
One of the best ptions trading platforms that's designed for active traders and cost-sensitive investors. If you're willing to do the work to price each of the two commission schedules, you can often spend less than with other options platforms.
Fees:
$0 per options trade, $0.60 per contract
Account Minimum:
$0
Special Offer
New accounts with qualifying assets earn $50 to $5,000 using code FOOLAFSA
OnTradeStation'sSecure Website.
Our Rating:
Rating image, 4.0 out of 5 stars.
4.0/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
Like Robinhood, Webull is essentially a no cost options broker that doesn't charge options trading fees for commissions or per contract. Additionally, the platform is easy to use and offers access to more than just stock options trading. If you're considering Robinhood, compare it to Webull as well.
Fees:
$0 per trade
Account Minimum:
$0
OnWebull'sSecure Website.
Our Rating:
Rating image, 4.5 out of 5 stars.
4.5/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. = Best = Excellent = Good = Fair = Poor
Bottom Line
The competitive base options commission and tiered per-contract pricing, alone, land Interactive Brokers a spot on this list. The otherwise robust feature set and low options trading fees also make it a solid platform to trade options.
Fees:
$0 per options trade, $0.15-$0.65 per contract
Account Minimum:
$0
Open Account for Interactive Brokers
OnInteractive Brokers'Secure Website.
Our options trading methodology
Why you can trust our investing experts
Options trading brokerages are rated on a scale of one to five stars, primarily focusing on fees, ease of use, and quality of the trading platform and research offerings. Our highest-rated platforms for options trading generally include the following:
1. Low costs to invest
We run a comprehensive review of routine fees, since account management costs can have a meaningful impact on your ability to invest profitably. Some of the factors we look for when ranking the best options trading platforms include:
- Stock, ETF, and mutual fund commissions
- Margin rates
- Maintenance and transfer fees
2. Great customer support and service
We place a high level of scrutiny on a brokerage's service and support when looking for the best options trading platforms, especially considering that a customer will likely interact with their brokerage's support team on multiple occasions. Items assessed may include:
- Presence (or not) of branch offices
- Quality of online and phone support
3. Strong product quality and features
Today's online brokers need a well-rounded suite of products and features to stand out in our ratings since we think brokerages need to provide a one-stop shop that meets an investor's comprehensive needs. Items assessed may include:
- Trading platform and mobile app quality
- Research offering quality
- Broad access to ETFs and mutual funds
Reviews of the best brokerages for options trading
Robinhood
Best options trading platform for: Options traders looking for an affordable, mobile-first solution
Why we picked it:
Robinhood is our overall top pick for options trading because it offers the basics of what you need at the lowest price.
Unlike most competitors, Robinhood does not charge a contract fee for options trading. Since there's also no commission, this makes Robinhood one of the cheapest platforms out there for trading options. While not the most feature-rich platform, Robinhood offers mobile trades so it's possible to buy and sell options contracts from all your devices.
One of our favorite brokers
We love Robinhood! This brokerage is currently on these "best" lists:
What the Robinhood platform looks like:
Desktop:
Mobile:
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Pros:
- $0 commissions
- High-quality mobile investment app
- Fractional shares investing
- Cryptocurrency investing through Robinhood Crypto
Cons:
- Consumer perceptions around trading restrictions
- No access to mutual funds and fixed income products
SoFi Active Investing
Best options trading platform for: Beginners options traders who want an easy-to-use platform with powerful tools
Why we picked it:
SoFi Active Investing is our top choice for beginner options traders because of its low cost, simple platform, and wide array of educational materials.
SoFi has a super intuitive options trading platform geared toward those traders who want to execute simple options strategies and don't need advanced charts or option chain tools. SoFi doesn't charge a contract fee, which makes it budget-friendly for the active trader, and the platform has tons of educational materials to help you if you get stuck.
Plus, it has a slew of data that you can mine, such as metrics on your breakeven point and your maximum profits and losses, all on a beautifully designed app you can access from all your devices.
TIP
One of our favorite brokers
We love SoFi Active Investing! This brokerage is currently on these "best" lists:
What the SoFi platform looks like:
Desktop:
Mobile:
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Pros:
- $0 stock and ETF commissions
- Low account minimum
- High-quality mobile app
Cons:
- No mutual fund
E*TRADE
Best options trading platform for: Active traders who want a powerful trading platform
Why we picked it:
E*TRADE is our top pick for active traders. Options trades are commission-free, although a standard $0.65/contract fee applies. While this fee makes E*TRADE costlier than some competitors, the brokerage does discount the rate to $0.50 per contract for active investors who make at least 30 stock, option, or ETF trades per quarter.
E*TRADE also offers feature-rich trading tools, especially in its free Power E*TRADE platform which is beloved among options traders.
TIP
One of our favorite brokers
We love E*TRADE! This brokerage is currently on these "best" lists:
What the E*TRADE platform looks like:
Desktop:
Mobile:
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Pros:
- $0 online stock, mutual fund, and ETF commissions
- Trading platform
- No minimum deposit
- Branch network
Cons:
- Margin rates
- Limited foreign market trading
Ally Invest
Best options trading platform for: Options traders with little money to invest
Why we picked it:
Like most brokerage firms, Ally doesn't charge a commission fee for options trades. It does have a $0.50 per contract fee, which is cheaper than some alternatives out there but not the cheapest on this list. Ally has no minimum investment requirement and charges no maintenance fees, making it a great choice for options traders without a lot of money.
Ally is best suited for long-term investors rather than active traders, as its platform does not include sophisticated research tools that frequent traders would probably need.
What the Ally Invest platform looks like:
Mobile:
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Pros:
- $0 stock, mutual fund, and options commissions
- No account minimums
Cons:
- Limited trading tools
TradeStation
Best options trading platform for: Active traders interested in a full-featured desktop platform
Why we picked it:
TradeStation isn't the cheapest platform for options traders, with users paying $0.60 per contract. But the added cost is still reasonable and easily justified, as it includes access to TradeStation's feature-rich desktop platform.
TradeStation is also host to the highly regarded options trading platform, OptionStation Pro. This platform offers a slew of intelligent tools that can help you implement complex strategies and project outcomes. It's basically a one-stop-shop for experienced options traders who want more tools than a typical platform and aren't intimidated by technical charts and analyses.
What the Tradestation platform looks like:
Mobile:
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Pros:
- Bonus
- $0 stock and ETF commissions
- Offers futures and cryptocurrency trading
- Low account minimum
- Quality trading platform
Cons:
- High margin rates
Webull
Best options trading platform for: Options traders who value low costs and mobile experience
Why we picked it:
Webull is a great choice for options traders looking for the cheapest platform around. There's no per-contract or commission fees, which sets it apart from most competitors. Webull also offers an intuitive, easy-to-use trading platform and especially shines with its feature-rich mobile software that can be used on all your devices.
Webull offers a decent selection of options trading tools and features, including real-time market OPRA data vis-a-vis its partnership with Cboe. Webull gives you access to 11 different options trading strategies, plus multiple research tools to help you analyze the market and make informed decisions. It also has a fairly active community of options traders who can help you with complicated strategies or give you inspiration for your next move.
TIP
One of our favorite brokers
We love Webull! This brokerage is currently on these "best" lists:
What the Webull platform looks like:
Desktop:
Mobile:
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Pros:
- $0 stock and ETF commissions
- Big potential bonus
- No account minimums
- Excellent mobile platform
- Competitive margin rates
Cons:
- No mutual funds
- Limited account types
Interactive Brokers
Best options trading platform for: Options traders with lots of money looking for a feature-rich platform
Why we picked it:
Interactive Brokers charges a variable per contract fee for options trading, with the price based on the size of the trade. This makes it an ideal choice for investors with deeper pockets who can qualify for lower pricing. Its WorkStation platform is a powerful trading platform chock full of features that options traders will love.
Interactive Brokers's award-winning options trading platform gives you plenty of tools in a super sleek interface that's easy to navigate and leverage. The host of advanced tools can help you monitor your positions, roll over expiring contracts, scour market data, and implement strategies that align with your objectives.
TIP
One of our favorite brokers
We love Interactive Brokers! This brokerage is currently on these "best" lists:
What the Interactive Brokers platform looks like:
Desktop:
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Pros:
- Low margin rates
- Robust trading platform
- No-transaction-fee mutual funds
Cons:
- Complicated pricing structure
- Some research tools incur a fee
Tastytrade
Best options trading platform for: Options traders looking for advanced technology at a low price
Why we picked it:
Tastytrade, formerly known as tastyworks, is one of the only brokerage firms that is primarily geared toward options traders. It offers some of the industry's lowest costs for options trading, charging a commission only when opening a position. Its trading platform offers some of the best technologies designed by the team that pioneered retail options trading, making it an ideal choice for active traders.
TIP
One of our favorite brokers
We love Tastytrade! This brokerage is currently on this other "best" list:
What the Tastytrade platform looks like:
Desktop:
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Pros:
- Excellent trading technology
- Low options commissions
- Availability of IRAs and trusts (other account types coming soon)
- No minimum balance requirement
- Options-focused mobile app
Cons:
- Few resources for long-term investors
- No mutual funds
- Margin rates not very competitive
- Not an excellent broker for beginners
Editor's Note: TD Ameritrade is transitioning to Charles Schwab
Over Labor Day weekend (Sept. 2 - Sept. 5, 2023), most TD Ameritrade accounts were transitioned to Charles Schwab accounts. We've removed TD Ameritrade from our list of Best Options Trading Platforms since any new accounts will be transitioned to Charles Schwab accounts in the future. Here at The Ascent, you can trust that we're constantly evaluating our top broker picks to bring you the most up-to-date information.
Options broker expert weighs in
J.R. Fenwick
CEO of FLipThatStock.com
J.R. Fenwick, CEO of FLipThatStock.com and Eric V. Johnson, an Options Expert are Co-Creators of “The FLip That Option Game” (FLipThatOption.com) a game that teaches beginners a specific options strategy that has low risk. They have been featured in Black Enterprise and numerous TV interviews.
What to consider when choosing an Options Broker?
With so many brokers to choose from, here are 5 things to consider when selecting a Broker
- Do they specialize in your area of interest. Some brokers specialize in options, others in investing and still others in trading
- Is there a minimum deposit required to open or maintain an account
- Do they charge fees, if yes, how much
- How easy is it to use their platform, this is especially important because you don’t want to spend most of your time trying to figure out how to use the platform vs. actually trading
- How easy is it to deposit and withdraw your money
Is options trading risky?
The #1 Rule in trading is to control your risk. With that said, all investing and trading carries risk, however, when properly educated, those who trade options can significantly minimize their risk using certain option strategies, even putting a cap on the maximum they could lose.
Who is options trading right for?
Options trading is right for those who like having a variety of strategies that can minimize their risk, while leveraging a small amount of capital to get great returns. Also it’s for those who seek consistent daily, weekly and monthly income without having to spend all day in front of a computer monitoring stock movements. This makes options a popular choice for many traders.
How does options trading work?
Options are contracts that let investors speculate on the future price of something, typically stocks. In its simplest form, an options contract lets -- but never requires -- the options buyer to purchase or sell stocks at a predetermined price by a set date. If the buyer decides to exercise their contract, the seller must follow through.
Options can be broken down into two basic types:
- Call options: Call options let options buyers buy stock at a predetermined price (the "strike price"). When investors buy call options, they're often speculating that a stock's price will rise before the options contract expires. If they're right, they can buy their shares of the stock at the lower strike price.
- Put options: Put options let options buyers sell stock at an agreed-upon strike price. When investors buy put options, they're often speculating that a stock's price will fall before the options contract expires. If they're right, they can sell their shares of the stock at the higher strike price.
To understand these basic types, let's look at two examples.
Let's assume Stock AB has a share value of $50. You have good reason to believe Stock AB will appreciate by 20% over six months and will at that time be worth $60 a share. To act on that belief, you could buy 100 shares of Stock AB for $5,000. Or, if you didn't want to wager $5,000, you could buy call options of $50 for $2 a pop (or $200 total for 100 shares).
If you're right and the stock appreciates to $60 within six months, you would earn $10 on each option, for a total of $1,000. Minus the $200 you paid for your options, you'd be left with a profit of $800. Not bad for an initial investment of $200.
Now, let's assume another investor comes along and believes Stock AB will depreciate over six months. In this case, they could buy a put options contract with a strike price of $60 for $2 a share and 100 shares total (or $200). If they're right and the stock falls to $36, they would make $24 a share for a total of $2,200 in profit ($2,400 minus the $200 for the put contract).
Features of the best options trading brokers
Options traders typically demand more of an options trading broker than people who are simply entering market or limit orders for stocks. Active option traders may prioritize options brokers based on their selection of calculators or screeners, whereas the infrequent options user may care about commissions alone.
Some features that may be considered "make or break" when picking the best platform to trade options are listed below:
- Commissions-free options trades: While price isn't everything, what you pay to make a trade ultimately plays through to your profit or loss. It makes very little sense to place a trade where the only likely winner is the brokerage firm. Commissions have come down quite a bit in recent years, and most of the best brokers for option trading offer commission-free trading on stocks as well, but there's still quite a bit of difference within the industry when it comes to options. Many of the best options trading brokers have commission-free options trading, but may charge options trading fees per contract.
- Platform: Admittedly, the award for "best options trading platforms" is a little subjective. What makes a good trading platform often has more to do with personal preference than anything else, as placing a trade through any brokerage is usually a matter of a few clicks. Some traders may see a full-featured platform as an asset, while beginning investors may see the complex interface as a liability. It's also important to note that some of the best options trading brokers offer a full-featured platform and an easier-to-use trading platform.
- Resources: Many of the best options brokers offer a full range of educational resources, which can be extremely valuable for investors who are new to options. As we mentioned, options can be very complex financial instruments and it is very easy to lose lots of money if you don't know what you're doing.
LEARN MORE: How to trade options
How do the best options trading platforms compare on trading fees?
Commissions and fees for options trades can vary wildly even among the best option trading apps, and the difference can really add up. Here's a look at the costs associated with options trading, and how much our best brokers for option trading charge.
Commissions
Most of the best options brokers have eliminated flat-rate commissions for online stock and options trading, and just use a small fee for certain options traded. That means they offer commission-free options trades, but charge a fee based on the number of options contracts traded. Thus, it costs more at most options brokers to trade 50 options contracts than it does to trade 10 options contracts.
The most common price point is roughly $0.65 per contract, although this can be between $0 and $1.00, depending on the stock options broker. Based on the typical fee of $0.65, to buy 10 contracts, a trader would pay $6.50 to make the trade ($0.65 × 10 = $6.50). To buy 100 contracts, the same trader would pay $65 in commissions to make the trade.
And to be clear, these are commissions for online options trades. If you conduct a trade by phone, the commission could be even higher.
The table below compares options trading platforms based on the cost to buy or sell 10 options contracts.
Options trading fee comparison for 10 contracts
Commission-free options trading used to be a pipe dream for investors, but that's no longer the case with the best platforms to trade options slashing costs to attract and retain accounts. Here's an options fee comparison when trading 10 contracts for our top picks:
| OPTIONS BROKER | COMMISSION TO TRADE 10 CONTRACTS |
|---|---|
| Robinhood | $0.00 |
| SoFi Active Investing | $0.00 |
| Webull | $5.00 - $6.50 |
| E*Trade | $6.00 |
| TradeStation | $5.00 |
| Ally Invest | $1.50 - $6.50 |
| Interactive Brokers | $10.00 |
| tastytrade | $0.00 |
Options trading fees for exercise and assignment
Options trading brokers sometimes charge fees to buy or sell options, but some also charge fees if you want to exercise an option, or if an option you have sold is assigned.
- Exercise fees: Let's say you own 100 call options on Nike at a strike price of $80. Nike rises to $85 per share by the expiration date, and you decide to exercise your right to buy the stock at $80 per share. A few options trading platforms will charge you a fee to exercise your options and buy the underlying stock.
- Assignment fees: Let's say you sell a covered call on Nike at a strike price of $80. Nike rises to $85 per share by the expiration date, and the owner of the options decides to exercise them, paying you $80 per share for the underlying stock. A few options brokers will charge you an assignment fee for this transaction.
Most of the best options brokers don't charge these fees anymore. Exceptions are TradeStation, which charges $14.95 for both options exercise and assignment, and SoFi, which charges $5. If you don't plan on holding options until their expiration dates, this shouldn't necessarily be an issue, but it's still worth keeping in mind.
What brokerages offer free options trading?
As mentioned before, most of the best options brokers have commission free options trading, but do charge a small fee per contract traded. Robinhood and Webull are the few free options trading platforms that have 100% free options trading, both a $0 commission and no per-contract fees for online trades. Robinhood and Webull also apply this same approach to stocks, ETFs, and cryptocurrency.
What is the best option trading broker for beginners?
Our pick for best beginner options trading platform is SoFi Active Investing. SoFi doesn't charge a contract fee, which makes it budget-friendly for the active trader, and the platform has a lot of educational materials for beginners to learn from. It also offers the ability to open other financial accounts all within the same platform, which is beneficial for beginners and seasoned investors alike.
What are the best apps for options trading?
All options brokers on this list and most notable stock brokers offer many platforms from which to enact trades, including within a mobile option trading app. Ultimately, the best apps for options trading will differ by user need, but here is a rundown of our picks of the best options brokers based on their app rating.
| OPTIONS TRADING APP | GOOGLE PLAY STORE RATING (OUT OF 5 STARS) | APPLE IOS RATING (OUT OF 5 STARS) |
|---|---|---|
| Robinhood | 4.1 | 4.2 |
| SoFi Active Investing | 4.1 | 4.8 |
| Webull | 4.3 | 4.7 |
| E*Trade | 3.9 | 4.6 |
| TradeStation | 3.9 | 4.5 |
| Ally Invest | 3.6 | 4.7 |
| Interactive Brokers | 4.6 | 4.0 |
| tastytrade | 4.4 | 4.1 |
Robinhood, Webull, E*Trade, Tradestation, and SoFi Active Investing are rated as some of the best investment apps overall by everyday users. But when it comes specifically to the best app to trade options, we think Robinhood and E*Trade are top picks to consider with this narrowed focus. These are the best apps for trading options based on a number of factors, including overall user ratings, options trading fees, simplicity to use, and the overall capabilities of their mobile app compared to full-featured online experiences.
Other best brokers
FAQs
Many options brokers have minimum deposit requirements for options trading. If you're interested in level one option trading, which usually includes covered calls and secured puts, the minimum requirement may be less than $1,000. But certain options strategies, such as net credit spreads, may require a much higher minimum account balance -- sometimes as high as $10,000 or more.
Trading options can be risky. You could face unlimited losses with certain trading strategies, such as selling naked calls. However, buying call or put options isn't as risky, because the most you can lose is the amount you spent to buy the options contract.
All options trading is leveraged investing, which inherently carries greater risk. Ensuring you do careful research and understand the trades you make can reduce the chance of loss.
You need an options trading broker to access the market, so you cannot trade options without one.
Many of the best options trading apps and platforms allow you to practice options trading, including E*Trade and TradeStation.
Call options give you the right (but not the obligation) to buy a certain stock at a certain price by a specific date. Call options provide another way to profit on the rising price of a company's stock without buying shares. In options trading, each contract gives you the right to buy 100 shares at a given price, so if the stock price goes up before your option expires, you can profit.
Put options give you the right (but not the obligation) to sell stock at a certain price in the future. If you believe a company's shares will go down in value, put options let you profit on that assumption.
No, not all online brokers offer options trading. If you're interested in holding options in your portfolio, it's important to check that the broker you're interested in will let you trade them before you sign up.
Options trading is subject to the "pattern day trading" rule, which classifies any investor who makes four or more day trades within five business days as a day trader. If you're classified in this way, you must keep a minimum equity balance of $25,000 in your account on any day that you're trading (check with your online broker as they may have different requirements). In options trading, a day trade is defined as closing a contract on the same day you open it.
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Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
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Steven is a personal finance writer covering topics from mortgages to credit cards to market news. He has written for The Motley Fool Canada, Ramsey Solutions, Nerdwallet, Clever Real Estate, and other major outlets. Steven launched his writing career at the age of four with his first book, "Revenge of the Bad Guys." He currently lives in Portland, Oregon.
Fact CheckedNathan Alderman
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Nathan Alderman has worked with The Motley Fool since 2005, making errors his arch-enemies in a variety of roles including a six-year stint as the dedicated fact-checker for The Motley Fool's premium newsletter services. As The Ascent's Compliance Lead, he makes sure that all the site's information is accurate and up to date, which ensures we always steer readers right and keeps various financial partners happy. A graduate of Northwestern University's Medill School of Journalism, Nathan spends his spare time volunteering for civic causes, writing and podcasting for fun, adoring his wife, and wrangling his two very large young children.
