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Finding a low commission options broker should not be a difficult task. We have listed the top five cheapest options trading brokers below assuming a hypothetical trade of 10 options contracts with the lowest commission rate from each broker:
Show Commission TableLow Commission Options Broker Fee Breakdown | ||
|---|---|---|
Broker | Options Contract Fee | Exercise / Assignment |
List of Low Commission Options Brokers for July 2018
Bottom Line
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 + commission free trades for new accounts
See the full Ally Invest review.
Bottom Line
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
Bottom Line
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.
Bottom Line
It doesn’t come cheap, but TD Ameritrade offers great options trading with 24/7 customer service. The fees TD Ameritrade charges are among the highest in the industry.
New TD Ameritrade accounts can get free trades: Trade commission-free for 60 days + get up to $600*
See the full TD Ameritrade review.
Here is the same list above but in clickable text format:
Commissions Are More Important Than You Think
Selecting an options broker with the lowest commissions is very straightforward. Although a lot of online brokerages receive payments for order-flow and lend out client balances, the number one way they make money is through trade commissions.
As a trader, knowing this is very important, because reducing the cost of transacting in the marketplace is just about the only aspect of the market you can control.
When you overpay for commissions (when there is a cheaper alternative), you are literally handing over your money and lowering your overall profitability as a trader. If you trade just 50 options contracts a month for one year, you would be paying TD Ameritrade $867.00 to execute your trades.
Because Ally Invest offers 24/7 customer service just like TD Ameritrade, we’ll use them for a comparison. The same 50 options contracts a month would cost $537.00. There is simply no valid reason to overpay by $330 every year to execute the same trade.
Important Points
At the end of the day, a lot of online brokers are pretty similar. This is why picking a low-cost options broker is so important. There is no need to overpay for an identical service that you could get for far cheaper with different broker.
A perfect example of this is TD Ameritrade and Ally Invest. Both brokers offer 24/7 customer service and robust trading tools, but the cost of trading 10 options contracts with TD Ameritrade is $5.50 more than Ally Invest for each side! Why on earth would anyone want to automatically lose $11.00 on every trade?
Also, please note how Interactive Brokers (IB) was deliberately left off of this list. Interactive Brokers charges absurd account fees and auto-liquidates “risky” short options positions. You can read why IB is downright dangerous for futures and options trading here.
Low commission options brokers for 2018
| Options Broker | Low Commission |
|---|---|
| Ally Invest | $3.95 |
| TradeStation | $1.00 |
| tastyworks | $1.00 |
| Zacks Trade | $0.75 |
| TD Ameritrade | $6.95 |
| Firstrade | $2.95 |
Updated: September 14, 2018