Best Options Brokers 2018

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See a comprehensive overview of the best options brokers as of July 2018. Regardless if you trade part-time as a hobby, or full-time as a profession, using the best options broker is critical to your success as a trader.

Overpaying for options contract commissions, exercise and assignment fees, and being limited by your broker with options trading approval levels is a recipe for disaster. These are the best options brokers for 2018, primarily based on cost, but also based on factors like customer service and options trading platforms.

Best Options Brokers for 2018

Broker

Trade Fee

Exercise/ Assignment Fee

Ally Invest

$3.95 + $0.50

$9.95 / $4.95

tastyworks

$1.00

$5.00 / $5.00

Firstrade

$2.95 + $0.50

$14.95 / $14.95

TradeStation

$5.00 + $0.50

$14.95 + $14.95

TD Ameritrade

$6.95 + $0.75

$19.95

E*Trade

$6.95 + $0.75

$19.95

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), and options are therefore traded much more actively than stocks. Plus, charging $0.50 to $0.75 per contract, with am 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 2018 is Ally Invest. Out of all of the brokers that offer 24/7 customer service, Ally has the lowest fees for options trading, and no inactivity or maintenance 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.

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.

Best Options Brokers

This is a list of the best options brokers for 2018. For active options traders, tastyworks is the best choice, and for occasional options traders (like covered call sellers) Ally Invest is the least expensive options broker.

  • Ally Invest
  • tastyworks
  • Firstrade
  • TradeStation
  • TD Ameritrade
  • E*Trade

3 Options Strategies to Start

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 great neutral strategy

Long Call – A bullish strategy

Long Put – A bearish strategy

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