The 8 Best Options Trading Platforms of 2020

From beginner solutions to expert portfolios

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Options trading is a high-risk area of the investment world where you can pay for the option to buy or sell a specific security at a set price on a future date. Based on fluctuations in market prices for those securities, the value of options rises and falls until their maturity date.

If you want to trade options, you’ll need a brokerage account that supports them. Each platform is unique and has its own pros and cons, so it’s best to understand what you want before you sign up with a broker. Learn more about the best options trading platforms to determine which one may be best suited for your needs.

Best Options Trading Platforms of 2020

TD Ameritrade: Best Overall

TD Ameritrade
Courtesy of TD Ameritrade

Rock-bottom pricing and top tier platforms combine to make TD Ameritrade our top choice for options traders.

Options trades have no base commission and cost $0.65 per contract for self-directed online trades. There’s no minimum balance, but you do need a minimum of at least $2,000 to access some margin trading and advanced options privileges. 

Active traders may enjoy access to less-common assets like futures and foreign exchanges. Newer traders could benefit from exploring TD’s various platforms to learn the ropes. The basic web platform supports simple and multi-condition orders. Experienced options traders may want to consider thinkorswim, TD Ameritrade’s paid platform that provides options statistics, trigger orders, and more.

Note: In November 2019, Charles Schwab announced that it is acquiring TD Ameritrade. The acquisition is expected to close by the end of 2020. Once closed, it’s likely that TD Ameritrade platforms and Charles Schwab platforms will be combined into one.

  • Trade costs: $0.65 per contract
  • Account minimum: $0
  • Recurring fees: None
What We Like
  • Basic web and advanced thinkorswim desktop platforms

  • Low cost per contract with no per-trade commissions

  • No account minimum requirements or recurring fees

What We Don't Like
  • Uncertainty surrounding trading platforms after Schwab acquisition

  • High costs for margin traders

Tastyworks: Runner-Up

tastyworks logo

Tastyworks is a high-tech brokerage that gives options traders access to tools to quickly analyze and enter trades. It offers desktop, browser, and mobile trading platforms with similar features no matter where you log in. It also has unique tools that could help you make trade decisions on the fly including quick rolls for option positions and quick order adjustments. Also, the platform gives you access to videos of tastyworks traders executing options trades, discussing strategy, and offering research.

Options on stocks and exchange-traded funds (ETFs) have no base commission and require a $1 per contract fee when opening a trade ($10 maximum per trade “leg,” which is a trade that takes place in an order with more than one component). There is no commission to close an option position. Options on futures cost $1.25 per contract to open and $1.25 to close.

  • Trade costs: $1 per stock and ETF contract, up to $2.50 for futures
  • Account minimum: $0
  • Recurring fees: None
What We Like
  • Options trading is the primary focus

  • Tastyworks network gives opportunity for traders to learn from one another

  • Commission caps for large trades

What We Don't Like
  • Per-contract fees are higher than competitors

  • Fewer investments available outside of options

Charles Schwab: Best for Beginners

Charles Schwab

Courtesy of Charles Schwab

Beginners will likely feel right at home learning how options trading works and building their skills on Charles Schwab’s platform. The brokerage offers extensive resources for learning the ins and outs of options trading.

Price-wise, Schwab charges no base fee and a $0.65 per contract fee. That matches pricing from TD Ameritrade. 

And, as you become more experienced, Schwab’s tools grow with you. You have access to advanced charting tools and trade calculators built into Schwab’s investment platforms. You can choose to trade online or use the advanced StreetSmart trading platforms, which has most features expert options traders would want (think quotes and trades, for example). 

  • Trade costs: $0.65 per contract
  • Account minimum: $0
  • Recurring fees: None
What We Like
  • Low per-contract commission for options trades

  • Basic web platform and StreetSmart active trading platform

What We Don't Like
  • Advanced trading platform lags behind some options-focused competitors

  • Strict margin trading rules and relatively high margin rates

Webull: Best for No Commissions

Webull logo

Webull 

Webull is a newer investment platform that offers no commissions on stock, ETF, and options trades, including options base fees and contract fees. You won’t pay a dime for most options trading activity on Webull.

The only fees you are likely to run into at Webull are for margin trading, short-sales, advanced data feeds, and some very small fees charged by regulators no matter where you trade. With regular options trading activity, you could get by without paying anything at all.

Webull offers web, mobile, and desktop platforms ideal for the most active traders. If you trade at a high volume, the savings you’ll get from Webull could make switching worthwhile. When you open an account for the first time, Webull may offer generous new customer promotions in the form of free stock.

  • Trade costs: $0
  • Account minimum: $0
  • Recurring fees: None
What We Like
  • No-commission trading

  • High-tech trading platforms

  • Free-stock bonus for new customers

What We Don't Like
  • A limited list of tradable assets

  • Short history compared to its competitors

Interactive Brokers: Best for Expert Traders

Interactive Brokers
Courtesy of Interactive Brokers

Interactive Brokers is a top brokerage for advanced and active options traders. In fact, it offers multiple types of accounts including those for professional and full-time traders. But even without millions under management, serious options traders could find their needs well-covered at Interactive Brokers.

Most DIY investors and traders may want to sign up for the IBKR Lite account, which includes free stock, ETF trades, and no base fee for options trades. IBKR Lite has fixed pricing for options. If you’re a high-volume trader, you may want to upgrade to IBKR Pro. The Pro tier gives you access to fixed or tiered pricing options and longer trading hours.

Under IBKR Lite, options for U.S. markets have no base fee and cost $0.65 each. Thanks to tiered pricing, costs can go down to $0.15 per contract with high volumes. All orders have a $1 minimum, but that $1 is a drop in the bucket for larger traders looking to take advantage of the unique tiered pricing structure. However, IBKR Pro account holders must keep a $100,000 balance or generate $10 in commissions per month to avoid a $10 monthly inactivity fee.

You can sign up for a free trial of IBKR’s platforms to get a feel for which one may work best for your options preferences.

  • Trade costs: $0.65 per contract or less with tiered pricing
  • Account minimum: $0
  • Recurring fees: None for IBKR Lite, up to $10 per month for IBKR Pro. 

What Is Options Trading?

Options trading is a form of active investing where traders make a bet on the future value of specific assets including stocks, funds, and currencies. Instead of buying and holding the underlying asset directly, you hold a contract that gives you the right to buy or sell that asset at a specific price on a specific date and time.

If your bet is right and the asset moves up or down beyond value specified in your option contract, your option is “in the money” and you can exercise it for a profit. If your bet is wrong, your option becomes worthless.

Options trading can be very complex. It may utilize multiple conditions and market prices change almost constantly during the trading day, or 24 hours per day in some markets. This makes options trading very risky compared to long-term investments in mutual funds, ETFs, or even many stocks. We recommend only getting involved with options trading if you understand what you’re doing and can tolerate the risks involved.

How Much Money Do I Need to Invest?

Thanks to brokers offering accounts with no minimums and no commissions, you could start trading options with just a few dollars. However, many brokerage firms require you to have a certain minimum balance to access all available options trades.

There is no minimum required to trade options at many brokerages, but you may have to complete an additional application for options trading. You’ll need enough cash in your account to cover your trade positions and any fees based on your personal trading strategy.

Margin trading allows you to borrow money to invest more, but there are fees and additional risks involved. If you are brand new to options, consider a paper trading account. These work like a stock market game and allow you to test strategies with fake money before putting your real dollars at risk.

Pros
  • Profit from market fluctuations and volatility

  • Hedge other investments with low-cost options contracts that act like insurance

  • Limit trading risk compared to some stock and ETF investments

Cons
  • Options market volatility increases risk

  • Trades can be complex and intimidating to new traders

  • Risky day-trading options strategies often lose money

How Should I Choose an Options Trading Platform?

There are many options trading platforms to choose from. Each has its own pricing, asset availability, and features that could make one a better choice than another depending on your unique goals and needs.

When picking the best options trading platform for yourself, look at these key areas:

  • Pricing: Options trades can be free, $1, or a lot more. Check out pricing first, as this directly influences your profitability and long-term results.
  • Technology: Abilities to enter advanced and conditional orders with multiple conditions or legs may be vital to your trading strategy. Make sure you can enter the orders you’d like with an interface that works well with your style, preferences, and goals.
  • Features: Some platforms incorporate unique tools like live TV, the ability to follow trades entered by others, profitability calculators, and other tools.

How We Chose the Best Options Trading Platforms

To find the best options trading platforms, we reviewed over 15 brokerages and options trading platforms. Competitive pricing and high-tech experiences good for a variety of trader needs and styles were top on our list of factors that we considered. We also considered investment availability, platform quality, unique features, and customer service.

Article Sources

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  1. Tastyworks. "Pricing." Accessed June 22, 2020.

  2. Charles Schwab. "Pricing." Accessed June 22, 2020.

  3. Webull. "Pricing." Accessed June 22, 2020.

  4. Interactive Brokers LLC. "Account Minimums." Accessed June 22, 2020.

  5. Interactive Brokers LLC. "Commissions." Accessed June 22, 2020.