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Options Brokers Reviews

Table of Contents

  • How To Choose The Best Options Broker
  • Key Options Broker Selection Criteria
  • Options Brokers Reviews
  • Ally Invest
  • E-Trade
  • Robinhood
  • TradeStation
  • eOption
  • TD Ameritrade
  • Charles Schwab
  • Lightspeed

How To Choose The Best Options Broker

There are several things an option trader needs to look for in an options broker.

However, whilst most traders will need most, if not all, of the following factors, exactly how much of each, and therefore the best broker for them, will depend on their experience and trading style.

Therefore in addition to listing the characteristic to look out for, I’ll also indicate exactly who its most important for.

Here goes:

Key Options Broker Selection Criteria

Options Specialist

Some brokers are simply the options part of a much larger general stockbroker. In general these are not as good as the specialist options brokers who can concetrate and fully invest in their platform. They tend to be run by options people too, making them more aligned to the option trader mindset.

Cost

This one will be on the top of most people’s list. However, it’s often not an easy task to work out wich service is the most cost effective, due to the different pricing models trbrokers use.

Some charge per contract traded; others a fixed fee per trade; with most having combination of the two. A rule of thumb, however, is that you should be able to find a deal whereby you pay $1 per contract per trade.

Anything more and there’ll be a better deal out there. This is especially the caser for large volume traders: it’s always worth contacting the broker directly as they will usually be able to put you on to a good deal.

Range Of Products

Most options brokers trade most of the key products (SPY, RUT, AAPL etc) but if you’re into more esoteric trading products – international markets for example – then check that the broker offers these.

Customer service

A key part of a broker’s appeal, or otherwise, is its customer service. Whether it’s assisting in setting up the system, sorting out technical issues or just being around when things go wrong, the quality of customer service is a vital consideration.

User Interface and experience

How easy is it to use the platform and actually trade? If the platform’s clunky and hard to use, then it will distract from the trading experience and may even force you to make costly mistakes.

Tools & Education

This is probably the main point of differentiation between the major brokers. Providing excellent education – training courses, informative articles, even trade recommendations – or great analysis tools has been the main weapon of choice for many of the big options brokers.

For some, such as TradeKing, the educational content for customers is the main concentration; for others, such as tradestation, providing a sophisticated suite of programmable analysis tools for the experienced trader is the approach.

Anyway, in the next couple of sections we’ll look at the key options brokers and profile their strengths and weaknesses based on the above criteria.


Options Brokers Reviews


ally invest options broker review

Ally Invest

Ally Invest is a branch of the financial services company Ally Financial. A discount online brokerage, it is popular with experienced traders and new investors alike.

A major selling point of Ally Invest is its low cost and customers’ access to a suite of free tools, which are particularly useful for technical investors.

Options Specialist

Although Ally Invest has a number of specific features for options traders, it does not specialize in options.

Cost

At $0.50 per contract, Ally Invest offers some of the lowest costs for investors. There is no base commission rate, no minimum necessary to open an account, and no inactivity fees. Research and data are also free.

Range of Products

You can invest in a diverse range of products with Ally Invest. The brokerage meets industry standards for options trading.

Customer Service

As a web-based service, you can only receive support online — Ally Invest has no physical branches. You can reach customer support through chat, email, or phone, all of which are available every day of the week, but only between 7:00 a.m. and 10:00 p.m. EST.

User Interface and Experience

Ally Invest has both a browser-based platform and mobile app. Both are easy to use and particularly convenient for customers of Ally Bank, who can manage all their accounts in the same place. The interface is logical and particularly friendly to new investors, who may be overwhelmed by the complexity of platforms from some other brokerages.

The browser-based platform gives you access to screening tools, charts, and research. For options trading, the entire flow process takes place on a single page.

You pass from the options chain to the strategy workbench and then the probability calculator, ending with a profit/loss graph. This is likely sufficient for casual options traders, but it may fall short of what serious traders want.

The mobile app is even more simple — it just provides investors with core functions and features like quotes, trading, and tracking. Watch lists only refresh every five seconds and there is no chance to view charts or place trades after hours.

Tools and Education

In terms of tools, Ally Invest can provide you with the basics you need to trade options but little more. Education, in contrast, is quite in depth. In fact, of all the educational material Ally Invest offers, the content for options trading is the best. It comes in the form of articles and webinars.


E-Trade

One of the first brokerages to allow investors to trade online in the U.S. was E-Trade (you may see it stylized as E*TRADE). Today, the brokerage is one of the best choices for everyone from beginners to very active traders.

Options Specialist

Although E-Trade is not a specialist brokerage, one of its biggest strengths is option trading (along with mobile trading). Morgan Stanley intends to purchase E-Trade. Pending regulatory approval, the acquisition should happen by the end of the year.

Cost

Prior to October 2019, E-Trade charged a commission of $6.95, plus $0.75 per contract. Now, the brokerage offers zero commission on options trades and clients pay just $0.65 per contract. (Active traders pay a reduced price of $0.50.) There is no inactivity fee, no annual fee, and no minimum deposit.

Range of Products

Experienced traders will be satisfied with the range of products available from E-Trade, which includes advanced options strategies. However, no international trading is available.

Customer Service

An area where E-Trade excels is customer service. You can call or email the support team at any time. There are also 30 branches around the country, where you can receive support from financial consultants.

User Interface and Experience

Whereas the E-Trade mobile app is outstanding, the browser-based platforms (there are three, all available for free) could be better. In particular, the navigation on the browser-based platforms can be confusing.

For options traders, the best of the three platforms is Power E*TRADE, which gives customers access to real-time market data, customizable options chains views, more than 100 technical studies, position management features, and a wealth of other functions.

It also makes it easy for beginner traders to learn how to invest. For instance, the Snapshot Analysis tool uses smiley faces to express risk and reward and the platform informs users of key events to watch.

Tools and Education

It would be difficult to find a brokerage that offers better educational resources than E-Trade, particularly for new investors. As well as webinars, there are in-person events at local branches and courses through Morningstar investment research company.


Robinhood

Another discount company, Robinhood provides traders with a completely free service. The brokerage makes money by selling your order flow, which gives wholesale market makers the right to fill your order.

Robinhood once stood out from the crowd for its free service, but since many other brokerages have removed commissions, the price difference is less pronounced.

Options Specialist

As well as options, Robinhood offers stocks, ETFs, and cryptocurrency trading.

Cost

As mentioned above, Robinhood goes a step beyond other discount brokerages by charging nothing. There’s no base fee nor contract fee for options. Plus, there’s no account minimum.

You can, however, purchase Robinhood Gold membership for $5 per month. This can be worthwhile to active traders with a large account balance, as membership provides access to information like Morningstar reports and Level 2 streaming quotes.

Range of Products

Although Robinhood has a limited number of products in general, the selection for options meets industry standards.

Customer Service

Customer service from Robinhood is limited, with no opportunity to call a support team. Your only choices are email and social media.

User Interface and Experience

The user interface of the Robinhood platform is designed to appeal to new investors who want to start options trading without the need to spend. For this reason, it’s quite basic — although this does make it easy to use.

A great feature is the capability to sign up for an account in just a few minutes without the need to report a micro-deposit to verify your bank information.

In addition, Robinhood arguably has the best mobile app of any brokerage. It’s fast, gives you access to watch lists, has customizable price alerts, and allows you to do simple trade entries.

Tools and Education

Robinhood is a top choice for new investors for the educational material it provides. Its news blog — Robinhood Snacks — has great bite-size pieces of information that summarize the market.

Experienced traders, however, are likely to find the content lacking. The brokerage has none of the in-depth educational materials of many other companies.


TradeStation

Experienced traders have long turned to TradeStation for advanced tools and educational content. More recently, the brokerage started offering zero-fee trading to attract beginner investors.

Options Specialist

In addition to options, TradeStation offers stocks, bonds, futures, mutual funds, ETFs, and cryptocurrencies.

Cost

For zero-fee trading, you’ll need a TS Select or TS Go account. The good news is that both are free.

TS Select is the more popular choice. It requires a minimum deposit of $2,000 and allows you to make options trades for $0.60 per contract. TS Go has no minimum deposit requirement and you only pay $0.50 per contract for options.

The difference is that if you use the TradeStation desktop platform with a TS Go account, you’ll need to pay $10 for each trade and you’ll have a more limited access to tools.

Members of the military (active and veteran) as well as first-responders are eligible for the TradeStation Salutes program. Unlike the above, you can receive free options trades. In addition, professional traders can instead choose per-contract pricing, which costs $1 per options contract.

Range of Products

With TradeStation, you have full access to options trading, including advanced order types.

Customer Service

You can reach client services from Monday to Friday from 8:00 a.m. until 8:00 p.m. EST. You can also reach customer support through live chat and email.

User Interface and Experience

TradeStation has one of the highest-quality trading platforms, available in desktop, browser, and mobile versions. It’s the desktop version, though, that TradeStation is famous for.

This platform provides users with direct access to market, allows for automatic trade execution, and gives customers tools to monitor customized strategies. You can even test strategies in real time to check how they are likely to perform before you invest.

Tools and Education

The great experience doesn’t end with the interface. TradeStation also provides customers with advanced tools (although the premium tools are unavailable to TS Go clients).

For instance, the desktop platform has a built-in OptionStation Pro tool, which allows you to use custom grouping, stream Greeks in real time, and use advanced position analysis.

TradeStation is also excellent for its educational content, which comes in the form of tutorials, articles, and ebooks. Nonetheless, new investors are unlikely to find the training as helpful as the content from brokerages that are more targeted to beginners.


eOption

As a brokerage dedicated to options, eOption is an economical choice for options traders. Plus, there are no unnecessary extras cluttering up the interface.

You should consider eOption if you want to trade a high quantity of options for a low price. The brokerage now uses Plaid for its data transfers, which adds an additional level of security.

Options Specialist

In addition to options, you can invest in equities, mutual funds, bonds, and ETFs. For all of these, eOption is designed just for advanced investors who are already skilled at trading and want to see fast executions. You can try out the service for 60 days without funding an account.

Cost

eOption is one of the few remaining brokerages that charges a commission, although the fee is only $1.99 per leg. However, the contract fee is extra low at just $0.10. This means you’ll spend less than with most other brokerages if you trade at least five contracts per order.

The minimum deposit for an account is $500 and there is a $50 inactivity fee for customers who don’t use their account at least twice in 12 months.

The exception is if you have a balance of at least $10,000 in credit or debit, in which case eOption waives the entire inactivity fee.

Range of Products

Although international investors are welcome to trade with eOption, the products are run of the mill.

Customer Service

You can call or email the customer support team between 8:00 a.m. and 8:00 p.m. EST from Monday to Friday.

User Interface and Experience

The simplicity of the eOption platform means it is easy to use. Plus, it still has plenty of opportunities for customization, all of which focus on options functionality and include drag-and-drop widgets. Direct-access traders have the chance to use an advanced platform.

The mobile app works in much the same way as the desktop software, although it is slightly less user friendly. For instance, it is difficult to find watchlists and there is no live-streamed data. In addition, there are no research sources on the mobile app. All the same, it is better than some of the apps from other brokerages.

Tools and Education

You’ll gain access to a few useful tools with eOption, such as automated trading, which is available to all clients who subscribe to the newsletter. Beyond this, features are limited, as the brokerage is aimed at traders who have already designed their own strategies. For the same reason, educational content is limited. Even the news feeds have minimal information.


TD Ameritrade

Originally a brokerage just for experienced traders, TD Ameritrade has been tweaking its platform to become more friendly to beginners over the last few years. It has certainly been successful — TD Ameritrade is now one of the best brokerages for options traders of all levels of experience.

Options Specialist

One of the largest brokerages online, TD Ameritrade does much more than options. In fact, it is poised to become even larger should the merger with Charles Schwab go ahead, although this could take several more years.

Cost

TD Ameritrade is another brokerage that eliminated base fees in late 2019. Options trades now have no commission and cost just $0.65 per contract — with the exception of contracts that are priced $0.05 or less, which have no fee at all. For 50 options contracts, the price is $32.50, although VIP customers can negotiate discounts for large volumes.

Range of Products

You can trade a wide range of assets on the TD Ameritrade platforms. This includes single-leg, multi-leg, and futures options. You can also design trades with up to eight legs.

Customer Service

Clients can call customer service at any time. The brokerage also has chatbots on all the major social media platforms and live chat available through its mobile app.

User Interface and Experience

TD Ameritrade provides everyone from casual traders to frequent investors with everything they need.

You have a choice of the website, mobile apps, or the Thinkorswim platform, the last of which is specifically aimed at active traders focused on derivatives and has a trading simulator.

The only downside to all this choice is that you may need to use multiple trading systems to access all the analysis tools you want.

Tools and Education

You’ll find a variety of tools on the TD Ameritrade platforms. Some top ones for options traders include Option Hacker and Spread Hacker.

With these tools, you can search for options strategies (simple and complex) like calendars, verticals, diagonals, iron condors, and covered calls. You can use real-time data and incorporate criteria like implied volatility, time to expiration, delta, and probability of profit.

Education is also a central focus of TD Ameritrade. The brokerage has its own media network, where you’ll find commentary, interviews, and content like webinars, articles, and courses for various experience levels.

In addition, you can access quotes and carry out basic account functions at any time from any AI virtual assistant app. Plus, the brokerage offers virtual and in-person training, using its more than 280 locations across the country to deliver courses.


charles scwab broker

Charles Schwab

Charles Schwab is one of the leaders in low-cost trading. As a big name in investment, you can expect to receive high-quality tools, research, and support.

Options Specialist

As you likely know, Charles Schwab is a full-service brokerage. The company offers a diverse range of investments, including options trading to fixed income and retirement guidance.

Cost

Like so many other brokerages, Charles Schwab eliminated commissions in October 2019. Options trades now incur a cost of $0.65 per contract. The price of 50 options contracts is $32.50.

Range of Products

Charles Schwab offers a better range of products than many of its competitors. For instance, the brokerage allows investors to trade in 12 markets outside of the U.S. Trades are in local currencies.

Customer Service

You can call customer support at any time or chat online with a live agent. You also have the opportunity to talk to a live broker, although you should bear in mind that you’ll incur a surcharge if you place any trades through the broker.

User Interface and Experience

Customers have the choice of the Charles Schwab website, a mobile app, and two primary platforms — one is desktop based and for active traders, the other is web based and for futures trading.

There is less of a learning curve to use either of these platforms than with those of some other brokerages. However, the platforms are also more simplistic, particularly compared to TradeStation and TD Ameritrade.

The mobile app is far less sophisticated than both the web-based and desktop-based platform. For example, it has no real-time streaming of quotes.

The Charles Schwab website could also be better. Navigation menus have a huge number of choices, which can make it difficult to find what you want.

Tools and Education

In-depth research makes Charles Schwab an excellent brokerage for expert traders, but it is an equally good choice for beginners. There is market commentary from the in-house team of experts and live broadcasting of 11 different shows.


Lightspeed

The name Lightspeed is derived from the fact that this brokerage offers high-velocity trading. It is aimed at just professional and very active traders — other investors are unlikely to meet the balance requirements.

Options Specialist

Lightspeed specializes in options, future trading, and day trading. It is a division of the larger Lime Brokerage.

Cost

Lightspeed charges $0.60 per contract (with a minimum of $1) and $4.50 per trade. The brokerage also requires investors have a minimum deposit of $10,000 to use the web-trader platform and $25,000 for the other platforms. There is a minimum monthly commission of $25 if your account is under $15,000.

It’s only worthwhile to use Lightspeed if you purchase at least 500 options contracts a month. Purchase even more than this and you’ll receive a discount. For instance, if you are trading more than 100,000 options per month, you’ll pay just $0.20 per contract.

Range of Products

The multiple order entry options mean that you can customize your order to meet your preferences. As well as choosing from defaults, you can create your own order specifications.

Customer Service

Clients can only receive customer support by phone or email between 8:00 a.m. and 5:00 p.m. EST.

User Interface and Experience

Lightspeed offers some more advanced trading platforms. In particular, its Lightspeed Trader offers expedited order entry and execution. It costs $130 per month to access this platform, although every commission charge contributes to reducing the fee.

A benefit of the platform is direct-market access. Orders head straight out of one of the routed destinations without going through an intermediary brokerage firm. Clients also receive Level 2 data in real time and can configure the platform to keep their favorite tools on top.

Tools and Education

Lightspeed offers absolutely no tools for beginners but plenty for frequent traders. A highlight is the chance to choose trading venue, which allows you to select whatever is best for the specific options.

You can choose to route your order to more than 20 venues or use the Lightspeed order route, which uses an algorithm to generate the best execution.

Educational content from Lightspeed is high quality but limited. It includes webinars, demos, and paper trading account practice for free.

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