List of the best brokers for options trading in 2018
Options Trading Commissions and Fees
Price for 10 contracts
If you ask any diehard options trader what the best broker is for options trading, you’ll likely get a variety of answers. This is because many traders rate brokers based on different factors.
Best All-Around Options Broker for 2018
Options Bro’s Rating
With Ally’s acquisition of TradeKing, excellent trading software is now paired with 24/7 customer service and ultra-low pricing. Among the online options brokers that offer 24/7 customer service, Ally Invest has the lowest commissions and fees.
Ally also has very valuable promotions for active options traders: Up to $3,500 cash bonus + all new accounts receive 90 days of commission-free trades, up to $500 in value.
See the full Ally Invest review.
Out of every online broker that has 24/7 customer service, Ally has lowest options and stock commissions, and Ally’s web-based options trading platform and mobile app with comprehensive analysis tools are huge advantages for options traders…it’s truly the full options trading package, and it comes at the cheapest possible price without sacrificing trading ability.
Having said that, one of the most important factors when selecting an options trading broker is cost. When you bag a winning trade (or close out a losing trade), every dollar that you spend on commissions and fees is a dollar you could have had in your pocket. When you make 100+ trades a quarter, trading commissions add up.
Best Options Broker for Professional Traders
Options Bro’s Rating
Zacks Trade is a better version of Interactive Brokers. Unlike IB, Zacks Trade doesn’t charge inactivity fees or have a very steep account minimum. Plus if you have a lot of options that expire in the money, Zacks Trade doesn’t charge for exercise or assingment of options, which is a huge bonus.
Zacks Trade is currently offering a promotion for 2018: Trade stocks for $1 until 2019. Learn More.
Full Zacks Trade review
Zacks Trade has very personalized customer service, very low commissions for options contracts, and offers access to international equities and bonds.
Zacks uses Interactive Broker’s software, but has no inactivity fees or account maintenance fees. It’s a pretty great brokerage firm if you know what you’re looking for, and you plan on trading options extensively.
Best for Highly Active Traders
Options Bro’s Rating
tastyworks is a brokerage for the active options trader, and their low pricing and options-specific trading software are indicative of that. Their trading software is second to none, and all closing options and stock trades are free.
tastyworks is currently offering a promotion for options traders: New for 2018! Commissions on Equity Options Trades Capped at $10 Per Leg!
Full tastyworks review
If you can reduce your transaction costs, you will, by definition, instantly become a more successful trader. For active traders, high trading fees add up quickly. If you’re going to trade a lot, and are serious about trading, tastyworks is the best choice. Their fees are extremely low, and their trading software is unparalleled.
Is the Cheapest Options Broker Automatically the Best Options Broker?
Definitely not, because you get what you pay for. But at the end of the day, online options brokers are kind of similar. 99% of online brokers offer the exact same functionality, yet some still charge vastly higher fees. A great example of this is Charles Schwab.
Until they recently slashed their fees, Charles Schwab charged some of the highest fees in the entire industry. The ticket charge for a single options trade used to start at $9.99! For reference, deep-discount brokerages like tastyworks charge $1.00 per contract, and since closing trades are free, it’s more like $0.50 per contract.
Ally Invest is one of the newest stock and options trading brokers for 2018, and they have some of the best pricing in the entire industry. As an exclusive deal for active traders that make 10 trades or more per fiscal quarter, Ally charges a base charge of only $3.95 and $0.50 per contract!
It also depends on your typical trading volume. If you frequently trade small lots of contracts, brokers that offer options trading for $1.00/contract will be a better choice.
Web-Based Trading Platform vs. Downloadable
There are only a handful of retail brokers in the industry that offer downloadable trading platforms. For the most part, it’s cheaper and just as reliable to for a brokerage to offer a trading platform that is web-based.
One of the benefits of downloadable platforms, like TD Ameritrade’s flagship platform, thinkorswim, is more customization and advanced options analytics/trading features.
Other platforms like Interactive Brokers’ Trader Work Station (TWS) offer a lot of customization options, but after a certain point, changing the uptick and downtick colors for bids and asks in an option chain simply do not matter to your profitability.
The bottom line is, as long as there is no lag or delay in order entry/exit and quotes, there really is no problem with an active options trader using a web-based trading platform.
Therefore, for 99% of traders, web-based platforms are just as good, if not better than clunky downloadable trading platforms. Moreover, more and more traders are managing their portfolios from their smartphones via mobile applications, so the days of desktop trading might be a thing of the past.
So What’s the Best Options Broker?
The short answer is that it’s tough to say. We are quite fond of Ally Invest’s simple yet effective options trading platform, knowledgable 24/7 customer support, low trading commissions, and lack of maintenance or inactivity fees. In our eyes, Ally Invest offers everything we’d ever want in an options broker.
The Options Bro conducted a thorough review of some of the best options brokers, but ultimately the options broker that will suit you best largely depends on cost, personal preference, and your trading activity. Besides concrete factors like transaction costs, some traders are going to like one platform more than another platform.