Options trading is getting more and more popular, particularly as investors search for novel and creative ways to boost the performance of their retirement portfolios. Compared to other forms of investment, options trading has a higher level of risk, but if you are informed and aware of the hazards, it may be beneficial.
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| Updated for November: The Top 6 Options Trading Platforms for 2022 |
We provide this guide with our picks for the top six options trading platforms for 2022 to help you up your options trading game.
The six are included in the table below, along with an overview of their key characteristics. A more thorough examination of each platform will come after that to assist you in selecting the one that will work the best for you.
Top 6 Platforms for Trading Options, According to Us
Here are the top six options trading platforms for 2022 in order of our numerical ranking:
- Firstrade: Best All-Around
- E*TRADE: Best for New Account Bonus
- Webull: Best for No-Fee Options Trading
- Robinhood: Best for No-Fee Options Trading
- TD Ameritrade: Best Trading Platform
- Ally Invest: Best for Comprehensive Financial Services
If you think one of the six detailed summaries might be of interest to you, feel free to read it.
Reviews of the Top Options Trading Platforms
Best All-Around: Firstrade
-PROS-
- No commissions for contract fees on options
- No fees on mutual funds, as well as stocks and ETFs
- One of the most advanced options trading platforms in the industry
-CONS-
- Customer service is limited to regular business hours
We choose Firstrade as the top overall options trading platform for 2022. They provide a ton more in addition to not charging commission or contract fees on choices. One of the most comprehensive platforms for investor tools and research for options and other sorts of investment, for instance, is what they provide. That contains tips and tricks for trading from well-known financial news websites like Morningstar, Zacks, and Benzinga. Additionally, you may trade on both the mobile app and the online platform.
Minimum Initial Investment: $0
Fees: Commission-free trades of stocks, ETFs, and mutual funds; no commissions or contract fees on options.
Other Investments Offered: Stocks, bonds, ETFs, mutual funds
Available Accounts: Individual and joint taxable accounts; traditional, Roth, and rollover IRAs
Additionally, Firstrade receives good grades for the variety of investments they provide. They provide investments in more than 11,000 mutual funds in addition to equities, bonds, and ETFs. That may be the widest range of mutual funds available anywhere. Furthermore, they don't charge commissions while exchanging those funds.
E*Trade offers the best new account bonus
-PROS-
- Perhaps the most generous bonus paid in the brokerage industry
- Little to no fees on most trading
- One of the best options trading platforms offered in the industry
- Customer service is available 24 hours a day, seven days per week
-CONS-
- Charges high margin rates
In addition to offering a very significant initial account bonus, E*TRADE ranks second on our list for its superior options trading interface. To assist you in identifying fresh trading possibilities, they offer impartial analyst research, quotations, headlines, and charts in addition to investment tools and screeners. All of this takes place on the Power E*TRADE platform, which also has simple-to-use tools for trading stocks, options, and futures.
- Minimum Initial Investment: $0
- Fees: Commission-free trades of stocks, ETFs, and options (+ $0.65 per contract fee); more than 4,000 no-transaction-fee mutual funds
- Other Investments Offered: Stocks, bonds, ETFs, mutual funds, currencies, and futures
- Available Accounts: Individual and joint taxable accounts; traditional, Roth and rollover IRAs
The brokerage industry's most substantial initial account incentive may be provided by E*TRADE. Based on the amount you deposit in your new account within 60 days of opening, they pay on a sliding basis. Starting at $50 for a $10,000 account, the maximum beginning deposit is $3,500 for a $1.5 million or higher account.
E*TRADE offers more than 4,400 no-transaction-fee mutual funds in addition to commission-free trading of stocks and ETFs. On the platform, you can trade futures and currencies as well.
Webull is the best for free options trading
-PROS-
- No commission or contract fees on options
- Fast, efficient trading platform
- Offers trading in cryptocurrencies as well
-CONS-
- Very limited trading tools and resources
- Customer service is limited to email only
- Does not offer joint taxable accounts
Webull is more of an investment app than a full-service stockbroker. It's among the greatest investment applications available, in fact. The fact that there is no contract fee and no commission on options transactions is of special importance to options traders. You will then be able to trade options without taking transaction fees into account. And doing so will increase your earnings while reducing your losses.
Other than that, Webull is a generally reliable investment site. Although the platform only offers email-based customer care, it offers complimentary real-time OPRA and CSMI data as well as 10 different options trading techniques. Both desktop and smartphone versions are accessible.
- Minimum Initial Investment: $0
- Fees: Commission-free trades on stocks or ETFs; no commissions or contract fees on options
- Other Investments Offered: Stocks, ETFs, and cryptocurrencies
- Available Accounts: Individual taxable investment accounts; traditional, Roth, and rollover IRAs
Additionally, Webull provides commission-free transactions in equities and ETFs. Additionally, you may use this program to trade cryptocurrencies if you're interested.
Robinhood is the best for free option trading
-PROS-
- No commission or contract fees on options
- Fast, efficient trading platform
- Offers trading in cryptocurrencies as well
-CONS-
- Very limited trading tools and resources
- No availability of IRA accounts
- Very limited customer support
Due to the absence of IRA account access, Robinhood would have tied Webull for the third position as the best for no-fee options trading, but they were instead ranked fourth.
The majority of the time, though, Robinhood functions just like Webull. While the platform is fairly sparse in terms of tools and resources, it does give you everything you need for options trading, at least if you're an experienced trader. You can execute commission-free trades of stocks and ETFs.
- Minimum Initial Investment: $0
- Fees: Commission-free trades on stocks or ETFs; no commissions or contract fees on options
- Other Investments Offered: Stocks, ETFs, and cryptocurrencies
- Available Accounts: Individual taxable investment accounts only
Similar to Webull, Robinhood is unique among investment brokers and apps in that it allows you to trade cryptocurrencies alongside stocks, options, and ETFs. Trading international equities have some restrictions, though. Only a small subset of the available securities are covered by this feature, which is only accessible through American depositary receipts (ADRs).
Trading platform of choice: TD Ameritrade
-PROS-
- What may be the best trading platform in the industry, thinkorswim
- 24/7 customer support
- Full range of investments and services provided
-CONS-
- Due to being merged with Charles Schwab sometime in 2023. That will not necessarily be a problem, as Schwab is similarly recognized as one of the top investment platforms in the industry
- High trading fee on no-load mutual funds
Full-service investment broker TD Ameritrade offers commission-free trading in stocks, ETFs, and options. Since they do charge a $0.65 per contract cost on options, they don't exactly compare well to some of the other platforms on our list in terms of fees. However, TD Ameritrade is one of the best options trading platforms in the business in every other way.
- Minimum Initial Investment: $0
- Fees: Commission-free trades of stocks, ETFs, and options (+ $0.65 per contract fee); $49.99 per trade on no-load mutual funds
- Other Investments Offered: Stocks, bonds, ETFs, mutual funds, FOREX, and futures
- Available Accounts: Individual and joint taxable accounts; traditional, Roth, and rollover IRAs
The award-winning trading platform "thinkorswim" is where it all begins. For serious traders, it offers professional-level trading. In addition to idea creation using market patterns and the capacity to estimate the risk and return of trades, it features elite-level tools to do analysis and test methods. Additionally, it provides onboarding resources, such as platform lessons, to aid in your early start. It provides downloadable software that is completely customizable.
Ally Invest is the best option for Complete Financial Services
-PROS-
- Comprehensive financial services, including checking and high-yield savings, as well as auto loans, personal loans, and mortgages
- Offers a no-fee Robo-advisor if you want some of your portfolios professionally managed
- 24/7 customer service
-CONS-
- They do charge a per-contract fee on options
Another full-service investing brokerage platform, Ally Invest, offers all different kinds of assets, including options. They also provide commission-free option transactions, mirroring the competition, although there is a per-contract cost, albeit one that is at the lower end of the spectrum at $0.50 per contract. Additionally, they provide one of the industry's best options trading packages. Both the mobile app and the web version allow trading.
- Minimum Initial Investment: $0
- Fees: Commission-free trades of stocks, ETFs, and options (+ $0.50 per contract fee); $9.95 for mutual funds
- Other Investments Offered:
- Available Accounts: Individual and joint taxable accounts; traditional, Roth, and rollover IRAs
But it's in the financial services they provide that Ally Invest really excels. They provide one of the most complete packages available in the brokerage industry. A large portion of that is offered by Ally Bank, which provides some of the best-earning savings products on the market. They also provide one of the broadest selections of vehicle loans in the market since they were the old GMAC. They also offer checking accounts, personal loans, and mortgages.
You may use Ally Invest's Robo-advisor even if the platform may be best recognized for self-directed trading. It's ideal if you want to trade options and have at least a portion of your portfolio professionally handled. With no advisory fees, you can invest in a Robo-advisor for as little as $100.
Platforms for Trading Options for Novices
What are the choices?
A financial transaction known as an option is based on the value of the underlying security, which is often a stock. They are providing contracts to either purchase or sell a security within a specified time frame and at a defined price. Despite having the option to purchase or sell the securities, the option holder is not required by law to do so. Only if the holder would profit financially will the option be exercised.
Calls and puts are the two forms of options. The right to purchase the underlying securities is provided by call options once the price reaches a predetermined level. The right to sell the underlying securities at a predetermined price is provided by a put option to the holder.
For instance, a call option would let the holder sell a certain stock for $75 per share. The holder decides not to buy the stock at the present price of $60 and accepts the risk that it won't increase to that level. Instead, a small premium will be paid for the ability to sell the stock at $75.
The option holder can buy the stock at $75 and sell it right away for a profit of $10 per share, less the cost of the call option, if the stock does reach $85 within the specified option date, for example, 90 days.
The complete reverse is true with a put option. If and when the stock drops to $60, you might be able to sell it. The put holder will purchase the stock at $50 if the price falls to that level, sell it for $60, and make a profit of $10 per share on each share sold.
Since options are typically sold in 100-share lots, a $10 profit on either of the aforementioned trades would equal $1,000.
How to choose the best trading platform for options
Options trading is offered by a large number of financial brokers. Finding the top options trading platform might be challenging if you've never traded options before.
What is a brokerage account is the first thing you must inquire about. To make an educated decision, you must understand the fundamentals of brokerage accounts.
The top online stockbrokers are typically where the best options are chosen. They not only allow you to trade online, which is how trading is done today, but many of them also provide trading through mobile apps.
You should also become knowledgeable about different investing categories. These include the most profitable long-term and short-term investments for your money. Before starting to trade options, you'll need to put both together to make a balanced portfolio.
In a similar vein, you'll need to get some knowledge about investing in ETFs. ETFs, or exchange-traded funds, are linked to certain stock and bond indices, such as the S&P 500. They are a useful way to supplement your current holdings with a ready-made portfolio of securities. Learn how an ETF and a mutual fund are different from one another as well. Mutual funds don't always outperform the market, are actively managed, and charge high fees.
An alternative is to look at the top Robo-advisors. For a relatively little price, these online, automated investing services offer professional investment management. They can offer you a balanced portfolio to go along with your options trading and invest primarily in ETFs.
Studying fundamental investing
Investments do not just happen through options trading. Start by becoming familiar with stock investment. Utilize a solid introduction to investing to assist you in learning the ropes. In the end, options trading is just a more sophisticated kind of stock trading.
Additionally, you should be aware that trading options are not about generating quick money. Finding profitable methods to invest modest sums of money is more important.
Investing in options and cryptocurrencies
Compared to holding stocks, bonds, or funds, options trading has a higher level of risk. But many option traders also make bitcoin investments.
Learn how to invest in Bitcoin if investing in cryptocurrencies is also of interest to you, and then look into the top crypto exchanges. The most popular cryptocurrency, owned by investors the most, is bitcoin. To invest in cryptocurrencies, you normally require a crypto exchange, albeit previously in this book we said Robinhood and Webull both allow crypto trading.
How We Discovered the Best Platforms for Trading Options
We favored the following five criteria when compiling this list of the six best options trading platforms for 2022:
- Best for: We zeroed in on the best feature or features of each platform, to determine where each truly excels.
- Minimum Initial Investment: The lower the minimum requirement, the more investors can participate.
- Fees: We naturally favored platforms with low or no fees, particularly for options trading.
- Other Investments Offered: Very few investors invest in a single asset class. We favored those that offer a broad range of more traditional or alternative investment choices.
- Available Accounts: The more account types offered, the greater the participation in options trading could be. We prefer those that offer both taxable and tax-sheltered accounts.
Additionally, we expanded our search to take into account how each platform is regarded by individual investors.
FAQs on the Best Options Trading Platforms
What is trading in options?
With options, you may profit from the acquisition or sale of stock without really becoming its owner. Instead, you acquire the right to buy or sell securities within a specified window of time and at a specific price (the strike price).
You can use your option to buy or sell the stock and profit if the price moves in one of those two directions: above or below the strike price. However, you can just let the option expire if the price never reaches the strike price. The premium you paid for the option will be the only money you lose.
Why should I start trading?
Learn the basics of trading options first. You can get a ton of information online, particularly on YouTube, where you can view a variety of how-to videos.
Additionally, you'll need to register for an options trading account with a broker who provides it. Naturally, one of the six options outlined in this article is what we advise. You should focus your search on a broker who provides a virtual trading account as a novice options trader. This will allow you to experiment with different options trading strategies without risking actual money.
As opposed to stock trading, why do options?
There are two explanations: 1) higher possibility for profit and 2) lower risk.
Due to the fact that you may make several deals without tying up your money, there is a higher chance of profit. Additionally, there will be less risk because you won't lose a significant amount of money if the underlying stock doesn't perform as expected.
It doesn't necessarily serve as a substitute for classic buy-and-hold investment. However, it is a way to add a short-term trading strategy with higher profit potential to traditional investing.
What are the top platforms for trading options?
We're partial, but we think the six platforms our article lists are the finest. But feel free to look into other options if you're not completely pleased with any that we offered. The most crucial aspect of any trading platform is that it be the one you are most at ease with.
Even if you have to test out a few before you locate the appropriate platform, keep looking until you find it. As a successful options trader, the correct trading platform may be your greatest asset. Consider making the appropriate choice as important as any other financial decision you make in your life.
The Best Options Trading Platforms of 2022 in Brief
Here is our summary of the top six options trading platforms for 2022 once more:
- Firstrade: Best All-Around
- E*TRADE: Best for New Account Bonus
- Webull: Best for No-Fee Options Trading
- Robinhood: Best for No-Fee Options Trading
- TD Ameritrade: Best Trading Platform
- Ally Invest: Best for Comprehensive Financial Services
If you are an experienced, independent options trader, any of these trading platforms will be a wise pick. In light of this, choose the platform that best suits your investing preferences and style.
