Compare online options brokers
Even if you are not going to be actively making trades yourself, these are still things that you need to think about before selecting an online broker and signing up there. The commissions and fees that are charged are straightforward enough to check out, so it's worth comparing different brokers to see which are the most competitive. Always remember though, that cheapest is not necessarily best, and the commissions charged by a broker should be one factor that you look at and not the only factor.
It's also particularly important to check whether the standard commission rate applies if you are auto trading, as some brokers may charge higher commissions or additional fees if you are using an automated service. You should also see if there are any other standard fees, like an account management fee, that you might be liable for. The minimum amount you need to deposit is something else you need to look at.
A lot of online options broker stipulate that you must make a deposit of at least a certain amount, and this amount can vary significantly at different options brokers. Some might require a substantial deposit while others will accept lower amounts. You will obviously have an idea of how much you are planning to deposit, so you need to make sure you use a broker that will allow you to deposit your preferred amount. This might not be an issue for you, but it could be if you are only want to make relatively small trades.
We can strongly recommend these brokers based on a combination of our extensive research and our own personal experiences. Stock options were the very first type of options traded on the exchanges and they remain the most commonly traded type of option.
Despite there now being a wide range of financial instruments that options can be based on, there are still many traders that stick only to trading stock options. There is, of course, nothing wrong with this strategy and sticking to what you know best is often the best course of action. If you plan on exclusively trading stock options, then you will need to use a suitable broker.
The ones we have listed above are, in our opinion, the ones you should consider. There are many places on the internet that recommend options brokers, and some of these places will label a single broker as the best there is. Any recommendation is ultimately down to a matter of opinion, to some extent at least, and we understand why some experts prefer to promote a single broker: However, it's our opinion that it's not possible to determine what the single best online options broker is as some attributes of a broker will be important to some traders, while others may be looking for other qualities.
For example, a particularly active trader would probably have different requirements from a broker than someone looking to use auto trading services. This is why we have created a number of different categories of brokers and made suitable recommendations for each of those categories. On this page we focus on the best options brokers for traders that mostly trade stock options: Our advice covers the following points. One of the first things a lot of traders look for when deciding which online broker to sign up with is the costs involved, primarily the commission charge per trade.
The cheapest broker is unlikely to be the best broker as ultimately you do tend to get what you pay for. Alternatively, you could try out a range of different brokers, compare them, and decide which one is best for you. However, this would be pretty time consuming. We have produced this section specifically to help you choose a broker. As well as the list of our top rated online brokers above, we have also produced a number of other lists.
Each one of these contains a number of recommended online brokers that are particularly suitable for a specific purpose. You can see each of the broker categories that we cover linked over to the right. We have also provided some brief details about each category further down this page.
The first page in our section on the best options brokers is a comparison between the two main types of brokers: The distinction between the two is quite important to understand, as the services offered by the two is substantially different. In very basic terms, a full service broker will provide clients with advice and guidance in addition to executing orders as instructed while a discount broker will simply carry out orders on behalf on their clients. Both types have their advantages, and we explain more on the following page: Full Service Brokers vs Discount Brokers.
When you first begin trading, the chances are that you will be starting out with a relatively small amount of capital, and indeed you may be planning to only ever make small trades. Beginners and those trading with a low budget should be looking for fairly specific attributes before signing up with a broker.
An appropriate commission structure and low minimums for both the size of your deposits and value of your trades is essential. Any sign up incentives being offered could also be significant too. If you are a beginner when it comes to options trading we suggest taking a look at what we have found to be the best brokers for people just getting started.
As you probably know, contracts can be based on a variety of different underlying securities which give you many choices. Probably the most commonly traded are stock options; those contracts where the underlying security are stocks in publically listed companies. It isn't particularly difficult to find brokers that are suitable for trading stock options, but it's still important to choose your broker wisely.
If you are planning on trading mostly stock options, then please visit the following page for relevant recommendations. These all do an excellent job when it comes to trading stock options.