Buying and Selling Options – The 5 Best Online Brokers and Trading Platforms

When an investor begins trading options, he needs to establish trust with his option broker before depositing significant upfront capital into his option broker’s account.

There are numerous online brokers and platforms investors can choose from to begin trading options. This article will provide a list of the five best online option brokers that investors can research to see which broker fits their needs the best.

Under the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) regulates the market for all options which have a stock or index as the underlying security. Under the Commodity Futures Trading Commission (CFTC), the National Futures Association (NFA) regulates the market for all options which have forex, commodities, or futures as the underlying security.

These authorities protect investors and insure customer assets should the broker go bankrupt. No investor should trade options with a broker who is not registered and regulated by at least one of the above authorities.

The five brokers listed below are registered and regulated by at least one of the above authorities.

1. E*Trade: E*Trade options trade at a flat fee of $6.95 + $0.75 per contract. If an investor makes 30 trades or more per quarter, the rate reduces to $4.95 + $0.50 per contract. There is no minimum deposit required. This is on the higher end of commissions fees, but E*Trade provides an excellent online trading platform that is one of the best in the industry. E*Trade also offers a mobile trading app.
2. TD Ameritrade: TD Ameritrade options trade at a flat fee of $6.95 + $0.75 per contract. There is no minimum deposit required. Their platform allows investors to create custom rules and roll their existing options position automatically. The depth of customization in this platform is second to none. Also, the platform has detailed research tools, integrated option strategies built into the system, and a mobile app.
3. Charles Schwab: Charles Schwab options trade at a flat fee of $4.95 + $0.65 per contract. The minimum deposit to use this broker is $1,000. The platform is simple to use and includes display of option chains and option charting. With lower commission fees compared to other brokers, Schwab offers a good platform at a discounted rate.
4. Interactive Brokers: Interactive Brokers do not charge a base fee. The per-contract rate is only $0.70. Additional savings can be realized through more frequent trading. However, this broker is built for professional traders and the minimum deposit is $10,000. The platform itself is also very challenging to learn compared to the other platforms.
5. TradeStation: TradeStation options trade at a flat fee of $5.00 + $0.50 per contract. The minimum deposit for this broker is $5,000. Their platform makes analyzing potential trades easy with features that include spread management, three-dimensional graphs, and data analysis in real time.

Each of these brokers are reputable and safe to invest with. Deciding which one to use is entirely up to an investor’s personal preference.