Options trading has become more popular in recent years, as investors look to leverage their returns above what’s available in traditional investment ownership. If you’re looking to trade options, selecting the right broker will be mission-critical. For that reason, we prepared this list of what we believe to be the five best brokers for options trading.
This is an important consideration for options traders. Not all brokers offer robust options trading platforms. And some don’t offer options trading at all. We’ve narrowed the list down to five that offer options trading, including specific options niches.
Options trading is a very specialized type of investing, so you can’t simply pick any old broker. You’ll need one that offers specific options trading tools and resources.
We used the following criteria in coming up with our list of the five best brokers for options trading:
Other factors we considered in compiling this list include investment tools and research. Specifically, those that apply to options trading. Education is another important feature since many investors are new to options trading. But even if you’re experienced, there’s always more to learn.
Finally, in developing this list we looked at broker niches. For example, some specialized in true no-fee options trading. Others do have fees, but are strong on investor tools, research, and education, and also offer generous customer support.
That’s the criteria we used to determine the five best brokers for options trading.
With that said, here’s the list:
Best for: Best all-around for options trading.
Why Firstrade is a good broker for options trading: Firstrade takes our number one spot, but not for any single reason. Let’s start with price; not only does Firstrade provide commission-free options trades, but they also don’t charge an options contract fee.
They also offer plenty of options-specific resources. This includes the Firstrade Options Wizard. It provides instant feedback on the value and likelihood of success of any options trades that you’re considering. It offers professional grade options analytics, including trading strategy checklists, one- and six-month trend indicators, support and resistance levels, proprietary OptionsPlay score, more than 65 technical indicators, over 40 complex options strategies, and more.
Firstrade’s free OptionsPlay tool helps you define opportunities and instantly execute trades. It provides daily bullish and bearish trading ideas, instant options strategies based on various market outlooks, and optimal income opportunities for any stock or exchange traded fund (ETF).
They also offer specific options education. That includes free options trading courses, a full options trading video library, and even live trading events with professional options strategists. Extended hours for trading are available from 8:00 AM to 8:00 PM, Eastern time.
Best for: Options trading tools.
Why Charles Schwab is a good broker for options trading: Charles Schwab is the largest retail brokerage firm in the world because the company is good at virtually everything, including options trading. They’re not as good as Firstrade on the price side; like most brokers, they do charge a contract fee on options trades. But their options trading tools are second to none.
Schwab’s Idea Hub canvasses the market for trade ideas based on various factors like market volatility, action, earnings, and income-based strategies. The Trade & Probability Calculator is available to assess potential risk, reward, and pricing scenarios of your trades before you make them. The All-in-One Trade Ticket enables you to make fast single, multi-leg, and conditional orders.
You can trade options on SmartStreet Edge, Schwab’s advanced desktop trading platform. And you can take advantage of the Walk Limit tool to work your orders for you. It automatically adjusts the limit price across specified time criteria and price increments, to obtain a favorable execution price within the bid/ask spread.
Charles Schwab Pros:
Charles Schwab Cons:
Best for: Customer support.
Why Fidelity is a good broker for options trading: Fidelity is the second-largest retail trading broker in the world, after Charles Schwab. Both companies have excellent customer support, but Fidelity also has 140 brick-and-mortar locations in most metropolitan areas around the U.S.
But the company offers a strong options trading platform as well. Starting with education, they offer free options webinars, as well as articles, videos, and courses to help you learn options trading or become a better trader. They also provide coaching sessions through interactive conversations with members of their Trading Strategy Desk.
Trading tools include Fidelity’s Market Scanner, Strategy Ideas, Profit and Loss Calculator, Probability Calculator, and a Strategy Evaluator, to evaluate single and multi-leg opportunities, search for calls and puts, and filter searches by expiration, strike, volatility, and other criteria. You’ll also have access to the Argus Options Report. It provides ideas for both covered calls and calendar spreads and other option information. You can also filter by days to expiration, in or out of the money strikes, risk, return, and other criteria.
Best for: Margin trading and no options contract fees.
Why Webull is a good broker for options trading: Webull is one of the few brokers offering options trading both commission-free and with no per-contract fee. However, the platform is very limited in both trading tools and customer support.
Where Webull stands out is with margin trading. If you have a margin account with at least $2,000 in net value, you’ll get up to four times day-trade buying power, and two times overnight buying power. Although margin trading for options is different from what it is for stocks and other investments, Webull’s margin feature may be attractive if you are looking to invest in other securities, in addition to options.
For options trading, you can trade single-leg options, covered stock strategies, and vertical, butterfly, condor, collar, straddle, strangle, iron butterfly, iron condor strategies.
Best for: No options contract fees and options trading on the go.
Why Robinhood is a good broker for options trading: Much like Webull, Robinhood is an investment app that makes trading on-the-go a snap. And much like Firstrade, they not only offer commission-free trades on options, but also charge no contract fee. That presents options traders with a definite price advantage over most of the competition. But we can’t rank Robinhood as high as Firstrade because it doesn’t have as many trading tools, nor does it offer the level of customer support.
Like many investment apps that have sprung up in recent years, Robinhood is a limited trading platform that focuses on low cost and fast trades. Tools and research are limited, so the platform is not suitable for new investors. But if you’re confident in your options trading skills, Robinhood can be the perfect, true no-fee options trading platform.
And if you like, Robinhood is also one of the few trading platforms that offers trading in cryptocurrencies.
If you’re an advanced options trader, it’s likely you already found your preferred broker. But that choice isn’t always obvious for beginners or even intermediate traders.
Though many brokers offer options trading, it’s not necessarily their specialty. But that’s exactly what you need to be successful. Any of the five brokers listed above should qualify for the job.
If you’re more confident in your options trading skills, you’ll probably favor those that offer trades that are both commission free and have no per-contract fee. That will put Firstrade, Webull and Robinhood at the front of the pack. But if you’re a newbie, and need more investment tools, research, and education, larger platforms like Charles Schwab and Fidelity will be the better choice.