See a comprehensive overview of the best options brokers for 2019. Regardless if you trade part-time as a hobby, or full-time as a profession, using the best options broker can play a roll in your success as a trader.
Overpaying for options contract commissions, exercise, and assignment fees is a recipe for disaster. Options trading is more expensive than stock trading, so it behooves traders to look for the best options broker with the lowest commissions. These are the best options brokers for 2019, primarily based on cost, but also based on factors like customer service and quality options trading platforms.
Best Options Brokers for 2019
Exercise/ Assignment Fee
When looking at options brokers, of course aspects like trading technology and customer service matter, but at the end of the day, an options trade is an options trade.
Whether you have 1,000 long call options on Apple stock or 2 short put options on Facebook stock, once the position is on, your choice in options brokers isn’t going to determine the profitability of your position.
As such, it’s paramount to keep your options fees as low as possible. Although your broker won’t determine the success of an individual options position, overpaying in options commissions will certainly take away from your overall success as a trader. Every dollar you spend on commissions, statistically speaking, makes you less likely to be a profitable trader – most people overlook this fact.
Moreover, options contracts are where brokers make a significant portion of their revenue, because there are set timeframes for options (expiration dates), so options are therefore traded much more actively than stocks because they cannot be sold/bought and held forever. Plus, charging $0.50 to $0.75 per contract, with an industry-standard base charge of $3.00 to $9.00, quickly adds up for multiple contract and multi-leg orders, like iron condors.
With all of this said, our top options broker for 2019 is Ally Invest. Out of all of the brokers that offer 24/7 customer service, Ally has the lowest fees for options trading, plus no inactivity, maintenance, or market data fees of any kind. Bottom line: Ally’s 24/7 customer service offers peace of mind, their low pricing blows the competition out of the water, and you get free access to options trading and analysis software.
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.
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
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
TradeStation is a very popular options trading broker because of their low pricing and great trading platforms. TradeStation recently slashed their hefty monthly fees for market data, so now everything is free.
Unfortunately, there aren’t any TradeStation promotions.
See the full TradeStation review.
Selecting the Best Options Broker
As an options trader, it is actually very important to choose the best options broker. This is primarily because options are more expensive to actively trade than stocks.
With stocks, traders typically pay a flat fee ranging from $3 to $7 to trade an unlimited number of shares. With options, however, traders have to pay per contract.
Each options contract represents 100 shares of stock, so since there is inherent leverage with options, the idea is that fewer contracts need to be traded to establish an equivalent stock trade.
For example, just 10 options contracts is equivalent to 1,000 shares of stock, and if your options broker is Ally Invest, it would cost just $8.95 to trade 10 contracts.
These fees quickly add up, so it is prudent to select an options broker with the lowest fees and commissions.
Don’t Skimp on Options Trading Platforms
Although options are more expensive than stocks, this doesn’t mean you should ignore every other aspect of an options broker and merely choose the one with the lowest fees.
Customer service and trading platforms also matter – a lot. This is why Ally Invest (see full review) is great, because they have fantastic free options analytics software as well as 24/7 customer service.
Other brokers like Interactive Brokers promise cheap trades, but they make up for charging $0.85 per contract with no ticket charge by charging traders for level II options quotes. Moreover, IB also charges inactivity fees. Inactivity and maintenance fees, which are typically waived with trading activity, are very dangerous.
These inactivity fees compel traders to trade, and often over-trade. Often times, there simply is no opportunity in the markets to make money, or traders are simply busy with other activities, and being charged fees for not trading is pointless.
Risks Associated with Options
Options are riskier than stocks. This is a fact. It is also something to be aware of before you start trading.
Nevertheless, because of the increased risk with options, there is also an increased reward. It is possible to turn small amounts of money into large amounts of money with options. Read how we made $15,000+ in a day with options.
It is also possible to create income with options by selling them. In general, selling options is even more risky than buying them, because it is possible to lose more than your initial deposit. The Options Clearing Corporation outlined special risks associated with options here. The SEC also provides additional information about options.
3 Options Strategies to Start Trading
After you select an options broker, it’s time to select a strategy and start placing trades. These are three great neutral, bullish, and bearish strategies, respectively, that are perfect for beginners. Each of these trades have clearly defined risk.
Iron Condor – A neutral strategy
Long Call – A bullish strategy
Here are the best options brokers
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|Zacks Trade||International Markets|
Updated: Jan 30, 2021