If you’re looking for a solid brokerage for options trading, you’ll want to consider some of the top players in the industry.
We’ve analyzed the largest, most established brokers on the traits that matter to individual investors – trading commissions, account minimums, comprehensive research and account bonuses. We’ve evaluated each broker on its pros and cons, and within this group of top options brokers, we’ve rated the leading performers overall, those best for active traders, and those with low costs.
While one broker may be great for trading stocks or offer a huge selection of ETFs, it might not be a top player for options. And that’s one reason you’ll want to have more than one brokerage account, since you’ll get the best parts of several different brokers.
Best brokers for options trading in August 2020
Charles Schwab: Best overall
Charles Schwab does so many things well, all while keeping a keen focus on what’s good for the investor, making it a great selection as a best overall pick. In addition to fair pricing for options, Schwab also gives you fundamental research that should prove valuable in selecting the options you want to trade. Add on fantastic customer support and the brokers’ highly regarded StreetSmart Edge trading platform, and it’s hard to go wrong here. (Read more…)
Options commission: $0.65 per contract
Fidelity Investments: Best overall
Fidelity is neck and neck with Schwab on so many features, and it’s another solid pick if you’re looking for an options broker. Besides options commissions that are right in line with Schwab’s, Fidelity offers a solid customer experience, and its Active Trader Pro platform is one of the tops among brokers. Investors also like the fact that Fidelity doesn’t ding you for every little thing, unlike many brokers, which helps improve the overall experience significantly. (Read more…)
Options commission: $0.65 per contract
Interactive Brokers: Best for active traders
Interactive Brokers has long been regarded as a place for professionals, and with good reason. The broker to the pros offers two capable trading platforms, and it’s well known for ability to access virtually any security. Options commissions start at $0.65 per contract with no base commission, and the fee falls from there for truly high-volume traders (think 10,000 contracts or more.) But you’re not getting the level of fundamental research that you’ll find at Fidelity, Schwab, Merrill Edge and elsewhere. (Read more…)
Options commission: $0.65 per contract, with volume discounts available.
TradeStation: Best for active traders
Trade Station is another broker that caters to higher-volume traders, and its pricing reflects this focus. You don’t have to trade thousands of contracts to achieve a more attractive price than Interactive Brokers, and TradeStation offers options trading at $0.50 to $0.60 per contract, depending on which account type you select. That fee won’t get you fundamental research, but it does allow you to access the broker’s Options Station Pro, a tool that evaluates and places your trades. (Read more…)
Options commission: $0.50-$0.60 per contract, depending on account type.
Robinhood: Best for low costs
If low pricing is your biggest objective, then you’re likely to find Robinhood an attractive broker. The trading app is well-known for its $0 stock commissions but it also offers the same for options. Traders will get an easy-to-use interface on a mobile app that allows you to place trades intuitively, though you can also use a desktop platform if that’s your style. What you won’t get, however, is all the research and tools that many other brokers offer. (Read more…)
Options commission: $0
Ally Invest: Best for discounted trading
Ally Invest is a solid choice for those looking to reduce their trading costs. Like much of the industry, Ally has reduced its commissions, slashing its options pricing from a $4.95 base commission and $0.65 per contract to a simple $0.50 per contract. Ally offers basic research and works well for those traders who are existing customers of Ally bank and like the ease of consolidated accounts. (Read more…)
Options commission: $0.50 per contract.
While it’s easy to make a decision about which brokerage works best for you all about one variable, such as cost, it’s better to consider a broker holistically. You’ll want to consider the variety of benefits that the brokerage offers and evaluate how it meets your trading needs. And there’s always the potential to open more than one brokerage account, if you need the capabilities each offers.
(Featured image by D-KEINE / Getty Images.)
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Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.