Best Options Trading Brokers and Platforms 2016

March 14, 2016 Brokers, Investing

For any active investor, trading costs are an important consideration when shopping for the best online brokerage. But price isn’t everything, especially for options investors who rely on the right tools to build, test and track trading strategies and a broker that can quickly execute orders.

Below is NerdWallet’s roundup of the best brokers for options traders. For even more customized guidance based on your trading activity, use our free online brokerage comparison tool to find the best account with the features you need at the lowest cost. (Note that investors are required to maintain a higher equity minimum in their account in order to engage in some options trading strategies.)

Best overall for options trading

Our top picks for options traders offer sophisticated tools and quality trade execution.

OptionsXpress-Logo 4.5-stars
  • Offers a large investment selection with significant discounts for high-volume traders. See our OptionsXPress review.
  • Commission: Active traders pay a flat $12.95 for 1-10 contracts, $1.25 per contract for 11 and up.
  • Account minimum: $0 for a cash account
  • Promotion: 50 commission-free trades with deposit of $5,000 or more
tradestation 3.0-stars
  • In-depth research, advanced trading tools and speedy, accurate order execution. See our TradeStation review.
  • Commission: $4.99-$9.99 base rate and $0.20-$0.70 per contract, depending on volume
  • Account minimum: $5,000 ($5,500 for IRAs)
  • Promotion: Save 20% on commissions

Committed traders seeking access to the same tools the pros use can tinker to their heart’s content with the offerings in TradeStation’s award-winning desktop platform. In addition to direct-market access and automatic trade execution, TradeStation has tools for tech-savvy investors to design, test-drive, monitor and even sell their custom trading strategies to other investors. However, TradeStation’s tools aren’t for the casual options investor: The broker’s $99.95 monthly fee is waived for those who in the previous month carried a $100,000 account balance or traded at least 5,000 shares, 50 options contracts or 10 round-turn futures/futures option contracts. TradeStation’s pricing also favors bulk traders, with volume discounts and either flat or per contract fees.

For mildly active traders starting to wade deeper into options investing, OptionsXpress is a good alternative. All of the OptionsXpress platforms — web-based and desktop — and tools are free to customers and include much of what you’d expect from an options-centric platform (customization, real-time quotes and the ability to view options chains). The broker charges no extra fees for its tools and has no trade or account minimum balance requirements. That said, its pricing does favor more active traders: Options trades at OptionsXpress are just $1.25 per contract for active traders, with a $12.95 minimum for up to 10 contracts. Customers who don’t meet that trade volume pay a $14.95 minimum for up to 10 trades and $1.50 per contract for 11 or more.

Best brokers for low-cost options trading

These brokers offer competitively priced options trading commissions and have eliminated or dramatically capped minimum trading fees.

OptionsXpress-Logo 4.5-stars
  • A robust trading platform without any extra fees for access. See our OptionsXPress review.
  • Commission: Active traders pay a flat $12.95 for 1-10 contracts, $1.25 per contract for 11 and up.
  • Account minimum: $0 for a cash account
  • Promotion: 50 commission-free trades with deposit of $5,000 or more
eoption-review-logo 3.5-stars
  • A good choice for active traders who prioritize low costs over fancy tools and trading platforms. See our eOption review.
  • Commission: $3 + $0.15 per contract
  • Account minimum: $500

For options investors seeking low trading costs, both OptionsXpress and eOption will help you get the job done with a minimum financial outlay. OptionsXpress earns our low-cost options trading recommendation with the caveat that, as mentioned above, it’s best for those who are at least somewhat active traders. Investors who place 35 or more options trades per quarter qualify for active trader status and pay just $1.25 per contract and no base fee.

If flat-rate pricing is more your style, eOption will execute your options trades for a fixed $3 plus $0.15 per contract. Although it does have minimum trading requirements, they are reasonable: Accounts that haven’t traded at least twice in the past 12 months or have less than $10,000 in credit or debit balances pay a $50 inactivity fee. EOption is also known for having some of the lowest margin rates available, with a base rate of 5.25% for account balances of $49,999 and under. However, while the trading costs are low, investors need to watch out for platform and data fees, which range from $1 to more than $200 a month.

Best options-investing trading platforms

These brokers offer some of the most powerful trading platforms available for a reasonable price.

TDameritradelogo 5.0-stars
  • Makes top-tier research and two trading platforms available to all customers. See our TD Ameritrade review.
  • Commission: $9.99 + $0.75 per contract
  • Account minimum: $0 for a cash account
  • Promotion: Cash bonuses ranging from $100 for deposits of $25,000 to $99,999, to $600 for deposits of $250,000 or more
optionshouselogo 5.0-stars
  • Provides low commissions and superior trading tools, particularly for options traders. See our OptionsHouse review.
  • Commission: $4.95 + $0.50 per contract
  • Account minimum: $0 for a cash account
  • Promotion: $1,000 in free trade commissions with deposit of $5,000 or more

TD Ameritrade and OptionsHouse happen to be NerdWallet’s top picks overall for best online brokers for stock trading, and here they are again, earning high marks for their options trading platforms.

TD Ameritrade’s highly regarded thinkorswim platform caters to active investors looking for professional-grade research and tools and the ability to test trade strategies and analyze potential risks and rewards. Customers can also use the broker’s web-based Trade Architect platform and mobile trading through TD Ameritrade’s Mobile Trader app. Although Trade Architect isn’t as fully stocked with tools and data as thinkorswim, it offers advanced features like a market/options heat map, screening tools and streaming news.

OptionsHouse started as a broker for self-directed active options traders, which is reflected in its professional-grade tools. Its merger with TradeMonster in 2014 bolstered its reputation by expanding its stable of offerings and adding TradeMonster’s highly regarded web-based trading platform. Now it is fully integrated into OptionHouse’s platform with significant automation, customization and fast ordering capabilities. On top of that, its low options trading commissions make it an appealing choice.

Best research for options investors

Both offer extensive research and data for free, as well as live classes and webinars for beginning and advanced options traders.

Chales Schwab 5.0-stars
  • Extensive research and two trading platforms available to all customers. See our Charles Schwab review.
  • Commission: $8.95 + $0.75 per contract
  • Account minimum: $1,000 (waived for customers who sign up for $100 a month auto-deposit)
  • Promotion: 500 commission-free trades with deposit of $100,000 or more
Fidelity Investments 4.5-stars
  • Provides low commissions and superior trading tools, particularly for options traders. See our Fidelity review.
  • Commission: $7.95 + $0.75 per contract
  • Account minimum: $0 for IRAs, $2,500 for brokerage
  • Promotion: 300 commission-free trades with deposit of $50,000 or more

If reasonably priced trading costs and free data and research are on your shopping list, both Charles Schwab and Fidelity are worth checking out.

Fidelity’s breadth of research stands out from the competition and draws from more than 20 providers, including Recognia, Ned Davis, S&P Capital IQ and McLean Capital Management. Through Fidelity’s web-based platform, customers can access the full suite of research when they sign in. And you don’t have to stop digging when you’re away from your computer: Fidelity has a strong mobile app that lets customers access the company’s full suite of research through a mobile browser.

Charles Schwab’s suite of options trading data, research and trading capabilities got a big boost when it purchased OptionsXpress (one of our top overall picks for options traders). Schwab itself has a fully realized suite of offerings for options traders, including trade assessment tools; customizable screeners; and access to Schwab analyst options-market commentary, live online webinars and pre-recorded seminars. Schwab offers two excellent platforms: the web-based platform Streetsmart.com (ideal for beginners) and the more advanced StreetSmart Edge with elevated charting functionality for active traders.

Because Schwab and Fidelity each have a physical presence across the country, they’re able to offer in-person guidance at local branches. You can attend free seminars on how to trade options as well as get one-on-one guidance on using the tools each platform offers.


Best options trading brokers: summary

Broker
Best
for
Highlights
Commiss-
ions
Promotion
Account minimum
Start investing
OptionsXpress
OptionsXpress
Overall
+
Low cost
Large selection; discounts for high-volume traders
$12.95 flat fee for 1-10 contracts (then $1.25/ contract)
50 commission-free trades with deposit of $5,000 or more
$0
TradeStation
TradeStation
Overall
Advanced research and tools, speedy execution
$4.99-9.99 /trade + $0.20-0.70 /contract
20% off commissions
$5,000 ($5,500 for IRAs)
EOption
Low cost
Good for active traders seeking low costs
$3/trade + $0.15/contract
None
$500
TD Ameritrade
Options trading platform
Top research; two powerful trade platforms
$9.99/trade + $0.75/contract
$100 to $600 cash bonus, depending on account size
$0
OptionsHouse
OptionsHouse
Options trading platform
Low commissions; superior trading tools
$4.95/trade + $0.50/contract
$1,000 in free trade commissions with deposit of $5,000 or more
$0
Charles Schwab
Charles Schwab
Research
Extensive research; two trading platforms
$8.95/trade + $0.75/contract
500 commission-free trades with deposit of $100,000 or more
$1,000
Fidelity
Fidelity Investments
Research
Low commissions; superior trading tools
$7.95/trade + $0.75/contract
300 commission-free trades with deposit of $50,000 or more
$2,500
($0 for IRAs)
Dayana Yochim is a staff writer at NerdWallet, a personal finance website: Email: dyochim@nerdwallet.com. Twitter: @DayanaYochim.

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