The best options trading platforms offer a broad list of features that includes robust research amenities, easy order entry, low pricing, actionable content, strong customizability, and good execution. In addition, given the complexity of this form of derivatives trading, the best platforms for trading options will also offer good educational resources, along with responsive and knowledgeable customer support.
After hundreds of hours of comprehensive research, data analysis, and live broker platform demos, tastytrade is our best overall online brokerage for trading options because of how it optimizes its pricing, user experience, and content to suit the needs of its options-focused client base. Tastytrade is just one of 26 online brokers that we evaluated based on 89 criteria, including available assets, account services, user experience, and additional features.
Best Options Trading Platforms of 2024
- Best Overall: tastytrade
- Best for Beginner Options Traders: Charles Schwab
- Best for Advanced Traders: Interactive Brokers
- Best for Mobile Options Trading: Interactive Brokers
- Best for Low-Cost Options Trading: Webull
- Best for Casual Options Traders: E*TRADE
Best Overall: tastytrade
- Account Minimum: $0
- Fees & Commissions: $0 stock trades, $1 to open options trades (capped at $10 per leg), $0 to close
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Why We Chose It
We chose tastytrade as the best options broker because of its low pricing for options trading, excellent technology for analyzing and trading options, actionable options-focused educational content, and top-tier customer support. The cost of trading options starts lower than most online brokers, and tastytrade offers caps on these competitive commission rates that allow higher volume traders to gain substantial economies of scale on options trading costs.
Pros & Cons
Pros
Low costs, especially for higher volume traders
Intuitive and easy-to-use trading platform
Strong research and analytical tools
Excellent educational content
Cons
Fee structure favors more active traders
Limited product offerings
Learning curve for the platform
No interest on cash balances
Overview
Tastytrade, based in Chicago, was developed in 2017 by the founders/developers of TD Ameritrade’s (now owned by Schwab) thinkorswim app, which is one of the best options analysis trading tools. Originally called tastyworks until changing its name in 2023, tastytrade has developed an excellent trading platform that offers stocks and ETFs, and an even stronger focus on options and futures trading. Tastytrade also offers cryptocurrency trading, but its offerings in fixed income are limited and expensive, and the company does not offer mutual funds. In addition to lower options fees for trading a single option, tastytrade’s fees are significantly lower if you trade multiple contracts.
Like most online brokers today, tastytrade offers commission-free stock and ETF trading. Its fees for options trading are just $1 on the first side of a trade, and there is no charge to close out a position, which averages out to $0.50 per contract per side. Tastytrade’s pricing compares favorably to the $0.65 per contract charge for both entering and exiting an options trade that is common across online brokers today. But more importantly, tastytrade also caps option commissions at just $10 per round trip, plus a $0.10 clearing fee per contract. This means that larger-size trades become more economical, especially when looking at multi-leg trades.
By taking user feedback into account, tastytrade has developed an interface that is highly functional. In addition to offering tools that allow users to look at different probabilities on different trades, the platform also allows users to compare different options against each other in a way that goes beyond displaying an options chain. Support for fractional share trading and specialized educational content along the user journey are other key features that help tastytrade stand out above the competition.
While tastytrade stands out for its options-specific educational content and live programming, simplified order entry, and volume-based trading discounts, less frequent traders with a propensity to hold higher cash levels should note that the platform pays basically nothing on uninvested cash balances.
Best for Beginner Options Traders: Charles Schwab
- Account Minimum: $0
- Fees: $0 for stock/ETF trades, $0.65 per contract for options
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Why We Chose It
Adding options trading to one’s financial toolbox is a big step that requires a good deal of learning and experience, and Schwab’s platform provides it. Schwab has an array of educational materials to help new options traders, including guides, live training, actionable options-specific content, and now, following Schwab’s acquisition of TD Ameritrade, the well-regarded thinkorswim platform. Further, Schwab also supports paper trading that allows new options traders to practice in a simulated environment before they commit real capital.
Pros & Cons
Pros
Platforms for all customer types
Thinkorswim integrated into the platform
Educational materials and guides for beginners
Options screening tools
Cons
Higher margin rates
Low returns on cash balances
Options fees applied on all legs of the trade
Overview
One of the nation's first discount brokerage companies, Schwab was incorporated in California in 1973 by Charles “Chuck” Schwab in response to the deregulation of brokerage commissions. Over the years, Schwab has become one of the leading online brokers, with more than 34 million accounts and more than $7.3 trillion in client assets. Schwab completed its acquisition of TD Ameritrade in 2023, which brought the thinkorswim application to Schwab and allowed the company to expand its operations to include foreign exchange and futures.
Schwab is a huge firm that offers multiple markets, account types, and platforms to its customers. Essentially, the firm is a full-service broker, but with the mindset of a discount broker. Schwab was an early adopter of zero-commission stock trading, and the company has done a lot to help traders of all levels become self-sufficient in managing their own money. As part of this support, Schwab has an extensive amount of educational content and multiple tools to help traders. Schwab has integrated the thinkorswim program that it acquired when it bought TD Ameritrade into its platform. In addition to offering some of the industry’s top options analytics, thinkorswim also gives users the ability to paper trade before committing real capital to the market. Schwab’s options interface allows users to pick a specific options strategy and easily choose the specific contracts for their chosen strategy.
In addition, Schwab offers options screeners that help users identify promising options strategies. Schwab supports many markets, and its technology and other support structures are strong. However, margin rates, which start at 13.575% on balances up to $25,000, are higher than many competitors. For instance, Interactive Brokers’ comparable rate is 7.83%, while Webull’s is 9.74%. Schwab’s options commissions are pretty standard, at $0.65 per contract. This may not be a rate that attracts high-volume options traders, but the costs to trade options at Schwab are reasonable.
Best for Advanced Options Traders and Best for Mobile Options Trading: Interactive Brokers
- Account Minimum: $0.00
- Fees:$0.00 commissions for equities/ETFs available on IBKR’s TWS Lite, or low costs scaled by volume for active traders that want access to advanced functionality such as order routing.$0.65 per contract for options on TWS Lite; that is also the base rate for TWS Pro users, with scaled rates based on volume. $0.85 per contract for futures.
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Why We Chose It
Best for Advanced Options Traders
Interactive Brokers (IBKR) is a long-time leader in trading technology. When combined, the platform's options-specific research tools, content, order routing capabilities, order types, algorithmic trading capabilities, and industry-leading low margin rates make it the best choice for advanced options traders.
Best for Mobile Options Trading
IBKR now offers three mobile platforms, with its top-end mobile platform, IBKR Mobile, delivering traders a full range of options strategies and some exciting analytical tools, all on a clean and easy-to-use platform. IBKR Mobile's Options Wizard and Options Analysis features, along with its simple order staging process, are key reasons why IBKR is our choice for best online broker for mobile options trading.
Pros & Cons
Pros
Low commission and margin rates
Excellent trading technology
Widest breadth of products available anywhere
Platforms for professional and less sophisticated traders
Cons
Platforms can be intimidating
Complex commission schedules
Limited access to IPOs and OTC Stocks
Overview
Interactive Brokers (IBKR) was founded in 1977 and is headquartered in Greenwich, Connecticut. IBKR is one of the first companies to utilize technology in financial markets, and the company continues to be an innovator in the industry. IBKR’s roots are in supporting institutional traders and sophisticated high-volume traders. Consistent with this, IBKR has the lowest margin rates of any of the online brokers, and it also pays a fair interest rate on cash balances greater than $10,000.
Today, IBKR caters to both institutional and retail trading customers and has two plans to choose from: IBKR Lite, which offers commission-free stock and ETF trading, or IBKR Pro. The Pro plan has all the bells and whistles, such as the ability to control order routing, perform analytics, and trade directly from charts, but also has a more complicated commission schedule that is tiered based on monthly trading volume. IBKR offers excellent screeners for bonds, mutual funds, ETFs, equities, and options that can be customized, and news and other third-party services and APIs can also be incorporated into the IBKR platform.
No broker in the world comes close to IBKR when it comes to the incredible breadth of trading vehicles and global markets available on a single platform, and IBKR has created the apps needed for professional traders to manage their positions when on the go. This sophisticated technology is also available to everyday traders who want full functionality. IBKR's GlobalTrader app is a more streamlined and easy-to-use app that is available for less demanding traders more focused on stocks, ETFs, options, and mutual funds.
While most brokers support up to four-leg options strategies, the IBKR Mobile app supports six-leg options strategies. IBKR Mobile’s options functionality includes spread templates to easily compare similar strategies in order to find the best risk/return trades. The mobile platform also provides analytical tools and the ability to analyze probabilities of options trades. IBKR Mobile also has a neat Options Wizard that allows users to express their price opinions on a stock, receive suggested options strategies, and execute with one-tap trading to take advantage of that forecast. Options trading on IBKR Mobile does not leave out the desktop functionality, which is our choice for best mobile app for options trading.
Best for Low-Cost Options Trading: Webull
- Account Minimum: $0
- Fees: $0 commissions for stock, ETF, and options
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Why We Chose It
Webull is our choice for the best low-cost options trading platform because it allows users to trade U.S. exchange-listed options for free, using an impressive array of trading and analytical features.
Pros & Cons
Pros
Commission-free stock, ETF, and options trading
Easy-to-use platform
Competitive interest rate paid on idle cash
Supports futures trading
Powerful charting features
Cons
Not a full-service broker
Limited portfolio management tools
No fixed income or mutual funds
Overview
Webull, which only launched as a broker-dealer in 2018, is a low-cost trading platform that is appealing to beginner and intermediate traders because of its powerful and highly customizable platforms, commission-free stock and ETF trading, $0 account minimums, and outstanding user experience. While it has become pretty standard for online brokers to offer zero-commission stock and ETF trading, Webull’s zero commissions for U.S. Exchange listed options is uncommon, and has traders looking to join the platform for the low-cost options trading. In addition, Webull fully extended trading hours to its customers, along with offering some of the most competitive APYs on uninvested cash in the industry.
Webull’s platform is more for traders than investors, as it has very little in the way of tools for portfolio analysis and portfolio creation. Webull does, however, offer some educational content on its website, and the company has also added futures trading to its platform.
Similar to several of its top competitors, such as Robinhhod and eToro, Webull receives payment for order flow for stock, ETF, and options trading as a way to offer commission-free trading, but this may impact the quality of order execution. That said, placing orders through Webull’s platforms is very easy. Webull has the lowest options rates because it does not charge commissions for options trades.
Best for Casual Options Traders: E*TRADE
- Account Minimum: $0
- Fees: No commission for stock, ETF, and mutual fund trades. Options are $0.50-$0.65 per contract, depending on trading volume.
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Why We Chose It
While some options traders want all the functionality offered by their trading platform, others are more casual in their trading approach, and seek a balance between functionality and ease of use. E*TRADE offers platforms for both types of traders, and with its sleek and powerful app, E*TRADE Mobile is our choice for the best platform for casual options traders.
Pros & Cons
Pros
Industry-best mobile apps for investors and traders
Excellent educational content
Top-tier research amenities and resources
Strong portfolio analytics
Cons
Low interest rates on uninvested cash
No fractional share trading outside of robo-investing
No access to international exchanges
No direct access to cryptocurrencies
Overview
E*TRADE was established in 1982 in California and was purchased by New York City-based Morgan Stanley in 2020. It was one of the earliest online brokers and took advantage of the introduction of the internet era to expand its business. E*TRADE offers a large range of investment and trading options that includes all major U.S. markets, as well as mutual funds, stocks and ETFs, options, bonds, and futures.
E*TRADE has millions of accounts with trillions of dollars in client assets. Its various platforms are designed to work for the company’s diverse customer base. E*TRADE Mobile is a more straightforward platform for traders and investors who do not need every bell and whistle. The company’s Power E*TRADE mobile platform, on the other hand, is designed for day traders and other sophisticated traders. In addition to the available mobile apps, E*TRADE also offers a website interface and desktop platforms that mirror the functionality of the mobile apps.
As you would expect from a large brokerage company with a broad range of client types, E*TRADE offers a lot of helpful educational content, as well as tools to help analyze and research trading ideas. The company has good screeners and analytical tools and even offers pre-built portfolio builder options for passive and beginner investors.
The E*TRADE Mobile app is best for traders and investors who do not want an overly complex platform; the company designed it with the idea of creating a good balance of function and simplicity. Options trading on E*TRADE Mobile is easy and intuitive for those looking to enter options positions in a more casual way. E*TRADE’s options commissions are pretty standard, at $0.65 per contract, but the broker does offer a discount of $0.50 per contract if you make more than 30 options trades in a quarter. These costs are not the lowest, which very active options seekers may want, but they are reasonable for the more casual trader who wants to have the flexibility that E*TRADE offers for multiple products.
The Bottom Line
Options trading has become an increasingly popular form of trading, and multiple online brokers have platforms to support traders along their journey. Some online brokers, including IBKR and E*TRADE, have multiple platforms to appeal to different options traders—one platform that provides the ability to do in-depth options analysis and trading, and a second platform for less technical traders that is less intimidating. E*TRADE is an excellent choice for more casual traders because of E*TRADE Mobile’s easy-to-use interface, while Interactive Brokers remains our top choice for the most demanding traders and for the best mobile app for options trading.
Schwab is our top choice for those looking to start trading options because of its educational content and training guides, as well as the ability to paper trade before committing capital. Webull may not be a great choice for those looking for assistance in building a portfolio, but is an easy-to-use platform that offers zero-commission options trading. Ultimately, tastytrade is our top overall choice for options trading because of its options-friendly fees and commissions, powerful trading platform, excellent trading technology and analytics, and industry-leading options-specific content, which is critical to helping traders learn how to master this complicated form of derivatives trading.
Compare the Best Options Trading Platforms
| Company | Account Minimum | Fee & Commissions | Legs |
|---|---|---|---|
| tastytrade | $0 | $1 per contract opened with a $10 cap, plus a $0.10 clearing fee per contract | 4 |
| Charles Schwab | $0 | $0.65 per contract | 4 |
| Interactive Brokers | $0 | $0.65 for IBKR Lite Platform; IBKR Pro has tiered commissions based on volume that range from $0.65 per contract to as low as $0.15 per contract | 6 |
| Webull | $0 | $0.55 per contract | 4 |
| E*TRADE | $0 | $0.65 per contract if there are less than 30 trades per quarter; discounted to $0.50 per contract if 30 or more trades are made per quarter | 4 |
Everything You Need to Know About Brokerage Accounts
Guide to Choosing an Options Trading Platform
An options contract gives the holder the right—but not the obligation—to buy or sell the underlying asset at a set “strike” price on or before a certain expiration date. The purchase price of the option is called the premium. A call option gives the owner the right to buy a stock at a set price and by a certain time, while a put option gives the owner the right to sell a stock at a set price by a certain time.
Options, which can be used to hedge or speculate, are called derivatives because their value is derived by the price movement of the underlying stock or ETF. Since stocks and ETFs usually have multiple call and put option contracts spanning different expiration dates and strike prices, different combinations of options can be used to create specific strategies for expectations of price movement or stability while controlling risk.
The basic options for price expectations are:
- If you expect the stock price to rise: Buy a call option or sell a put option.
- If you expect the stock price to fall: Buy a put option or sell a call option.
- If you expect the stock price to remain stable: Sell a call option and/or sell a put option with the strike price near the current price for either or both options.
Leverage
One important feature of options to understand is that the risk for the buyer of a put or call option is limited to the amount of premium they pay for the option, while the seller of the option would have theoretically unlimited risk on a call (because the price can keep going up indefinitely). For the seller of puts, the option has risk limited to the stock price going to zero. Therefore, sellers of options, unless hedged, are usually exposed to significantly higher risk than the premium they received for the options.
Another important concept with options is the leverage they afford. An exchange-traded options contract on a listed stock or ETF represents a contract for 100 shares of the underlying stock. Therefore, the out-of-pocket cost for a stock option is 100 times the price it is trading at because the contract is for 100 shares. Buying an option allows a trader to have control of 100 shares of stock by only laying out a small portion of the underlying value of the stock.
For example, if a stock is trading at $100, to purchase one hundred shares would cost $10,000 ($100 x 100 shares). But, an option may only cost a few dollars per contract to control a large number of shares. A call option trading at $5 would cost just $500 (100 shares x $5 option premium) to control 100 shares of stock worth $10,000. So, there is a good deal of leverage associated with using options to speculate.
How to Start
Investors need to open an account with a brokerage firm that supports options trading, and those with existing accounts at brokers that support options will need the broker’s approval to trade options. Your application will be approved or denied after providing details about your investment objectives, trading experience, and financial situation (e.g., annual income, employment details, net worth, and total net worth).
If approved, your broker will let you know which options level you're approved to trade; this determines the types of options strategies you are permitted to use. Depending on your broker and options strategy, you may also need approval for margin privileges.
The type of options you are approved to trade and the broker’s policies will help determine the minimum investment amount required for options trading. In general, $1,000 is the minimum required deposit for level 1 (entry-level) options trading, but the minimum deposit can be at least $10,000 for level 2 or level 3 options trading. Even if the required minimum is low, it's always a good idea to have at least $5,000 to $10,000 to start trading options.
Once approved for options trading, the next step is determining if you want to use options to hedge or speculate, and then which options strategies are best for you. This is best accomplished by using an option chain or matrix that lists all the expirations and strike prices for a stock to help you choose the right option for your market expectations. Expiration dates can range from days to months to years, depending on the liquidity of the underlying stock. Generally, the shorter the timeframe for an option, the riskier the option is because options are a decaying asset due to their having an expiration date.
What to Consider
The first and most important piece of information to consider before selecting an options trading account is what kind of trader you are. What is your trading style and risk appetite? Which options strategies do you want to employ? Do you want to hedge or use income strategies against a stock or ETF holding, or to speculate?
Generally, the prices of most options are fair, meaning the option you choose to speculate with is a personal choice. Some traders prefer to enter into options strategies with a high probability of making a small amount of money, while others prefer to be right less often but for larger payouts when they are correct.
The quality of the education offered by a broker can be very helpful for those just getting started with options trading. Frequent traders and those who trade a large number of contracts will be more sensitive to commissions and fees, so check out your prospective broker's charges and make sure you understand them.
While costs are one consideration when choosing an options broker and trading platform, there are other factors to weigh. If you are a new trader, it will be helpful to have a broker that offers substantial educational offerings, such as articles, videos, and webinars. Intermediate and advanced traders will want a robust trading platform and a full suite of options-specific trading tools and resources.
Common Strategies
Using options against a current stock or ETF holding is a common options strategy used by investors, and can be done in two basic ways. One is a strategy to increase income by selling covered calls against a stock or ETF holding; the option is said to be "covered" because the worst that can happen to the option seller is using the stock you own to make delivery on the exercised call option you sold, which limits your upside on your stock holding. The upside is the option not being exercised, so the seller of the covered call keeps their stock and the premium they sold the covered call option for.
Another common option strategy against a stock holding is to hedge the stock or ETF holding by purchasing puts against their holding. If, for example, the owner of a stock wants to keep a long-term stock holding, but thinks the stock may move lower in the short term, they can purchase a put on the stock. This way, if the stock moves lower, the put option will go up in value to hedge the losses to the actual stock holding. The downside is that the option expires worthless if the stock price stays above the strike price, but the position was protected if the stock moved lower.
Again, remember the risk associated with purchasing the option or selling it to ensure you have the right exposure to price changes.
What Is Options Trading?
Options trading is the purchase or sale of financial contracts that allow the owner the right, but not the obligation, to buy (a call option) or sell (a put option) a specific stock, ETF, futures contract, currency, or other underlying asset for a specific price (strike price) by a certain maturity date. Unlike owning a stock, however, options expire worthless if the price of the stock does not make it economically worthwhile to exercise the option by its maturity date. Options purchasers limit their risk to the cost of the option, while option sellers are exposed to potentially unlimited risk. Options can be used to hedge, or speculate with greater leverage than purchasing the underlying stock.
Is Options Trading Worth It?
Options are a tool that can be used to hedge or speculate. Generally, a common option on a liquid stock will provide a fair value relative to the stock’s price and past price movements. However, that does not mean options trading is right for you. With options, you can be right but still lose money if your timing is poor, and options can be quite volatile. But the owner of a stock can use puts to offset a stock’s losses if its price moves lower, or could sell covered calls against their stock position to generate additional income with limited risk. So, financial options are a powerful tool that is worth using if it meets your objectives and risk tolerances.
Is Trading Options Gambling?
With any form of speculation, whether it be investing in popular assets like real estate or stocks, positive returns are not guaranteed. Options traders use this form of derivatives trading to take calculated risks. Some people want higher-risk growth stocks, and others want quiet companies that pay a consistent dividend. They each have their positive and negative attributes, depending on your investment objectives. Yes, options can be used to speculate with a great deal of risk, but they can also be used to reduce risk, lock in profits, or take very specific positions based on timing and price expectations. Again, options are a very valuable tool for speculators and hedgers alike.
How We Picked the Best Online Brokers and Trading Platforms
Providing readers with unbiased, comprehensive reviews of online brokers and trading platforms is a top priority for Investopedia. We combined our industry research, subject matter expertise, and investor survey data to guide the research and weightings for our 2024 online broker awards. To collect the data, we sent a digital survey with 110 questions to each of the 26 companies we included in our rubric. Additionally, our team of researchers verified the survey responses and collected any missing data points through online research and conversations with each company directly. The data collection process spanned from Feb. 19 to March 19, 2024.
We then developed a proprietary model that scored each company to rate its performance across 11 major categories and 89 criteria to find the best online brokers and trading platforms. The score for each company’s overall star rating is a weighted average of the criteria in the following categories:
Additionally, during our 2024 research, many of the companies we reviewed gave us live demonstrations of their platforms and services via video conferencing methods and also granted our team of expert writers and editors access to live accounts so they could perform hands-on testing.
Through this all-encompassing data collection and review process, Investopedia has provided you with an unbiased and thorough review of the top online brokers and trading platforms.
Learn more about how we review online brokers.
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