Diksia.com - Stock options are contracts that give you the right, but not the obligation, to buy or sell a certain amount of an underlying stock at a specified price and time. Options trading can be a powerful way to leverage your capital, hedge your risk, generate income, and speculate on market movements.
However, options trading also involves complex strategies, high fees, and significant risks. Therefore, you need a reliable and user-friendly platform to execute your options trades and manage your portfolio.
But how do you choose the best stock options platform for your trading needs? There are many factors to consider, such as pricing, features, tools, research, customer service, and reputation.
In this article, we will review some of the best options trading platforms of 2024, based on over 30 variables, and give you some tips on how to find the one that suits you best.
Pricing
One of the most important factors to consider when choosing a stock options platform is the pricing. Options trading can be expensive, especially if you trade frequently and use complex strategies.
Therefore, you want to find a platform that offers low or no options contract fees, no trading commissions, and no hidden charges.
Some of the platforms that offer competitive pricing for options trading are:
- tastytrade – This platform is ideal for frequent options traders, as it charges a flat fee of $0.50 per contract, with no base commission or minimum deposit. It also offers efficient workflow, useful risk management tools, great design, and strong online content.
- Interactive Brokers – This platform is best for professional options traders, as it offers a tiered pricing structure that ranges from $0.15 to $0.65 per contract, depending on the monthly volume. It also offers algorithmic trading, Options Strategy Lab, Volatility Lab, Risk Navigator, Market Scanner, and other features.
- Charles Schwab – This platform is best for options traders who also value equity research and tools, as it charges $0.65 per contract, with no base commission or minimum deposit. It also offers the industry-standard thinkorswim platform, which has phenomenal charts and Hacker tools.
Features
Another factor to consider when choosing a stock options platform is the features. Options trading requires a lot of analysis, strategy, and execution, so you want a platform that offers a variety of features to help you with these tasks.
Some of the features to look for are:
- Trading platform – This is the software or web-based application that you use to place and monitor your options trades. You want a platform that is fast, reliable, secure, and easy to use. You also want a platform that offers advanced order types, such as conditional, contingent, and multi-leg orders, to help you execute your options strategies.
- Trading tools – These are the tools that help you analyze the options market, design your options strategies, evaluate your risk and reward, and optimize your performance. You want a platform that offers tools such as options chains, options calculators, options scanners, options screeners, options backtesters, and options simulators.
- Research – This is the information and data that help you understand the underlying stocks, the options market, and the economic and market conditions. You want a platform that offers research such as stock quotes, charts, news, earnings, dividends, analyst ratings, fundamentals, technical indicators, and market sentiment.
- Customer service – This is the support and assistance that you get from the platform provider, in case you have any questions, issues, or feedback. You want a platform that offers customer service such as phone, email, chat, social media, forums, FAQs, and tutorials.
Some of the platforms that offer a variety of features for options trading are:
- E*TRADE – This platform is best for options traders who prefer a web-based platform, as it offers a sleek and intuitive interface, with customizable widgets and layouts. It also offers Power E*TRADE, a more advanced platform that has options-specific tools, such as Live Action, StrategySEEK, and TradeLAB.
- Saxo Markets – This platform is best for options traders who want to trade stock options on global markets, as it offers access to over 1,200 equity options across the US, Europe, and Asia-Pacific. It also offers SaxoTraderGO, a web-based platform that has options-specific tools, such as Trade Ticket, Option Chain, and Option Board.
- AvaTrade – This platform is best for options traders who want to trade FX options, as it offers access to over 40 currency pairs, with flexible contract sizes and expiry dates. It also offers AvaOptions, a web-based platform that has options-specific tools, such as Risk Manager, Strategy Simulator, and Portfolio Summary.
Reputation
The last factor to consider when choosing a stock options platform is the reputation. Options trading is a serious and risky business, so you want to find a platform that is trustworthy, reputable, and regulated.
You want a platform that has a good track record, a loyal customer base, and a positive reputation in the industry. Some of the ways to check the reputation of a stock options platform are:
- Reviews – These are the opinions and feedback of other options traders who have used the platform. You can find reviews on websites such as StockBrokers.com, NerdWallet, Moneyzine, The Balance, and Kiplinger12345. You can also find reviews on social media platforms, such as Twitter, Facebook, and Reddit.
- Ratings – These are the scores and rankings that the platform has received from independent and authoritative sources, such as the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), the Better Business Bureau (BBB), and Trustpilot. You can also find ratings on websites such as StockBrokers.com, NerdWallet, Moneyzine, The Balance, and Kiplinger12345.
- Awards – These are the accolades and recognition that the platform has received from prestigious and influential organizations, such as Barron’s, Investor’s Business Daily, Benzinga, and The Motley Fool. You can also find awards on websites such as StockBrokers.com, NerdWallet, Moneyzine, The Balance, and Kiplinger12345.
Some of the platforms that have a good reputation for options trading are:
- Tradestation – This platform is best for options traders who want to use margin trading, as it offers competitive margin rates, starting from 3.5% for options. It also offers Tradestation Desktop, a powerful and customizable platform that has options-specific tools, such as OptionStation Pro, Option Analysis, and Option Scanner. Tradestation has been rated as one of the best brokers for options trading by Barron’s, Investor’s Business Daily, and Benzinga .
- Merrill Edge – This platform is best for options traders who are beginners, as it offers a user-friendly and educational platform, with guided investing and robo-advisory options. It also offers Merrill Edge MarketPro, a more advanced platform that has options-specific tools, such as Option Finder, Option Strategy Builder, and Option Chain. Merrill Edge has been rated as one of the best brokers for beginners by NerdWallet, The Balance, and Kiplinger .
- Robinhood – This platform is best for options traders who want to trade commission-free, as it offers zero fees for options trading, with no minimum deposit or account balance. It also offers a simple and sleek mobile app, with easy-to-use options trading features, such as multi-leg orders, price alerts, and earnings calendars. Robinhood has been rated as one of the best brokers for commission-free trading by NerdWallet, The Balance, and Kiplinger .
Choosing the best stock options platform for your trading needs can be a challenging and rewarding task. You need to consider many factors, such as pricing, features, tools, research, customer service, and reputation. You also need to compare and contrast different platforms, based on your preferences, goals, and experience level.
However, by following the tips and suggestions in this article, you can find the best stock options platform for your trading needs, and enjoy the benefits of options trading. Happy trading!
