Best brokers for options trading in April 2021

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If you’re looking for a solid brokerage for options trading, you’ll want to consider some of the top players in the industry. While these brokers have slashed their commissions for stock and ETF trades to zero, many still charge for a per-contract fee for options, so discount lovers may be on the lookout for a lower price while balancing that against a broker’s other features.

We’ve analyzed the largest, most established brokers on the traits that matter to individual investors – trading commissions, comprehensive research and trading platforms. 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.

While one broker may be great for trading stocks or offer a great trading platform, 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 April 2021

Charles Schwab

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 for options. 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.

Options commission: $0.65 per contract

Fidelity Investments

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.

Options commission: $0.65 per contract

Interactive Brokers

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 its 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.)

Options commission: $0.65 per contract, with volume discounts available

TradeStation

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.

Options commission: $0.50-$0.60 per contract, depending on account type

Robinhood

If low pricing is your biggest objective, then you’re likely to find Robinhood an attractive broker. While Robinhood hasn’t had the smoothest of starts to the year so far, 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 the same level of research and tools that many other brokers offer, though you can upgrade your account to Robinhood Gold for additional reports.

Options commission: $0

Ally Invest

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, and you won’t need to be a volume player to get this better-than-average price. Ally offers basic research and works well for those traders who are existing customers of Ally Bank and prefer a consolidated account.

Options commission: $0.50 per contract

TD Ameritrade

TD Ameritrade offers a healthy array of features for options traders, including its highly regarded thinkorswim trading platform and research from Morningstar and Credit Suisse among others. If you prefer your options trading on mobile, the broker has you covered there, too, with its Mobile Trader app that allows you to input those complex multi-leg trades. TD Ameritrade charges $0.65 per contract and doesn’t charge for option exercises or assignments.

(Charles Schwab has purchased TD Ameritrade, and will eventually integrate the two companies.)

Options commission: $0.65 per contract

E-Trade

E-Trade brings research and solid trading platforms to the table, and has discounted pricing, too. The broker’s Power E-Trade platform offers technical studies and a snapshot analysis that lets you see the risk and reward on a trade. You’ll get almost the same functionality on the Power E-Trade mobile app, including the ability to trade those multi-leg orders. The broker chops its per-contract, too, if you make more than 30 trades in a quarter, not a particularly high hurdle.

Options commission: $0.65 per contract, or $0.50 for more than 30 trades per quarter

Merrill Edge

Merrill Edge offers a couple notable advantages to the market, including its in-house research reports on individual stocks, especially valuable if you’re looking to use stock options. That’s available if you’re a Preferred Rewards client of the broker or parent Bank of America, and the integration with the bank may be useful if you want a consolidated picture of your finances or simply want to speedily move money from one account to the other. Options pricing is right in line with the rest of the industry here.

Options commission: $0.65 per contract

Can you trade options without a broker?

You’ll need a broker to trade options, because that’s how you access the market. Fortunately, it’s never been cheaper or easier. Not only is options trading much less expensive than it’s been in the past, but some brokers even allow you to trade options for no out-of-pocket cost.

However, not all brokers offer options trading, so make sure to check for that as you compare them. You’ll also want to look into their per-contract pricing. Higher-volume traders can receive significant discounts, and some brokers offer discounts for even more modest trading volume, so prices can differ somewhat among the more popular brokers.

How much money do you need for options trading?

You actually don’t need that much money to trade options, which is one of the reasons it’s so popular with smaller investors. The other major reason is that you can make a significant return, including hundreds of percent gain in a short period, as traders in heavily shorted stocks such as GameStop discovered.

You could start with literally a few hundred dollars for some options strategies, such as buying call options, though other moves such as certain strategies for put options will likely require more capital upfront. The payoffs in these strategies have different rewards and risks, and it’s crucial to understand what potential return you may get in return for the risk you’d be taking on.

Options trades are some of the riskiest ones you can make, and if a stock moves in the wrong direction, the value of the option could decline to zero very quickly. Worse, with some options, you may owe more money than you initially received from the trade. These risks are why many traders limit options to a small portion of their portfolio and never trade with money they need.

Bottom line

While it’s easy to make a decision about which brokerage works best all about one variable, such as cost, it’s better to consider a broker as a whole. Examine 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.

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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.