Best Options Trading Platforms for September 2023

Options can be used to generate income, hedge your risk, or add more fuel to your portfolio by increasing your exposure to certain stocks and indexes. But because options trading is inherently more complex than simply buying stocks or funds, options traders often need to be more selective in choosing the best options trading platform.

We've spent hundreds of hours reviewing options brokers, evaluating the top features investors need when choosing an options trading platform. And even more importantly, here at The Motley Fool, we are investors ourselves and use many of these brokerages for our own personal investing.

Plus, unlike many other finance sites, we do NOT allow affiliate compensation to determine which products we list here.

In the guide below, we'll share our top picks for the best options trading platforms and what you should look for when choosing the right options broker for you.

• Robinhood: Best overall options trading platform. Robinhood offers $0 per contract fees on options trading, comes with an easy-to-use interface, and provides a good baseline of information on options trading for anyone who needs it. And all of its features are accessible via the app.
• SoFi Active Investing: Best options trading platform for beginners. SoFi doesn't charge a contract fee, which makes it budget-friendly for the active trader, and the platform has a lot of educational materials for beginners to learn from.
• E*TRADE: Best for active trading. Options trades are commission-free, and though a standard $0.65/contract fee applies, the rate is discounted to $0.50 per contract for customers who execute at least 30 stock, ETF, or options trades per quarter.

Robinhood

Best options trading platform for: Options traders looking for an affordable, mobile-first solution

Why we picked it:

Robinhood is our overall top pick for options trading because it offers the basics of what you need at the lowest price.

Unlike most competitors, Robinhood does not charge a contract fee for options trading. Since there's also no commission, this makes Robinhood one of the cheapest platforms out there for trading options. While not the most feature-rich platform, Robinhood offers mobile trades so it's possible to buy and sell options contracts from all your devices.

SoFi Active Investing

Best options trading platform for: Beginners options traders who want an easy-to-use platform with powerful tools

Why we picked it:

SoFi Active Investing is our top choice for beginner options traders because of its low cost, simple platform, and wide array of educational materials.

SoFi has a super intuitive options trading platform geared toward those traders who want to execute simple options strategies and don't need advanced charts or option chain tools. SoFi doesn't charge a contract fee, which makes it budget-friendly for the active trader, and the platform has tons of educational materials to help you if you get stuck.

Plus, it has a slew of data that you can mine, such as metrics on your breakeven point and your maximum profits and losses, all on a beautifully designed app you can access from all your devices.

E*TRADE

Best options trading platform for: Active traders who want a powerful trading platform

Why we picked it:

E*TRADE is our top pick for active traders. Options trades are commission-free, although a standard $0.65/contract fee applies. While this fee makes E*TRADE costlier than some competitors, the brokerage does discount the rate to $0.50 per contract for active investors who make at least 30 stock, option, or ETF trades per quarter.

E*TRADE also offers feature-rich trading tools, especially in its free Power E*TRADE platform which is beloved among options traders.?

Ally Invest

Best options trading platform for: Options traders with little money to invest

Why we picked it:

Like most brokerage firms, Ally doesn't charge a commission fee for options trades. It does have a $0.50 per contract fee, which is cheaper than some alternatives out there but not the cheapest on this list. Ally has no minimum investment requirement and charges no maintenance fees, making it a great choice for options traders without a lot of money.?

Ally is best suited for long-term investors rather than active traders, as its platform does not include sophisticated research tools that frequent traders would probably need.

TradeStation

Best options trading platform for: Active traders interested in a full-featured desktop platform

Why we picked it:

TradeStation isn't the cheapest platform for options traders, with users paying $0.60 per contract. But the added cost is still reasonable and easily justified, as it includes access to TradeStation's feature-rich desktop platform.

TradeStation is also host to the highly-regarded options trading platform, OptionStation Pro. This platform offers a slew of intelligent tools that can help you implement complex strategies and project outcomes. It's basically a one-stop-shop for experienced options traders who want more tools than a typical platform and aren't intimidated by technical charts and analyses.

Webull

Best options trading platform for: Options traders who value low costs and mobile experience

Why we picked it:

Webull is a great choice for options traders looking for the cheapest platform around. There's no per-contract or commission fees, which sets it apart from most competitors. Webull also offers an intuitive, easy-to-use trading platform and especially shines with its feature-rich mobile software that can be used on all your devices.

Webull offers a decent selection of options trading tools and features, including real-time market OPRA data vis-a-vis its partnership with Cboe. Webull gives you access to 11 different options trading strategies, plus multiple research tools to help you analyze the market and make informed decisions. It also has a fairly active community of options traders who can help you with complicated strategies or give you inspiration for your next move.

Interactive Brokers

Best options trading platform for: Options traders with lots of money looking for a feature-rich platform

Why we picked it:

Interactive Brokers charges a variable per contract fee for options trading, with the price based on the size of the trade. This makes it an ideal choice for investors with deeper pockets who can qualify for lower pricing. Its WorkStation platform is a powerful trading platform chock full of features that options traders will love.

Interactive Brokers's award-winning options trading platform gives you plenty of tools in a super sleek interface that's easy to navigate and leverage. The host of advanced tools can help you monitor your positions, roll over expiring contracts, scour market data, and implement strategies that align with your objectives.

Tastytrade

Best options trading platform for: Options traders looking for advanced technology at a low price

Why we picked it:

Tastytrade, formerly known as tastyworks, is one of the only brokerage firms that is primarily geared toward options traders. It offers some of the industry's lowest costs for options trading, charging a commission only when opening a position. Its trading platform offers some of the best technologies designed by the team that pioneered retail options trading, making it an ideal choice for active traders.

How to choose the best options trading platform

One key point to keep in mind is that there's no such thing as the best platform for options trading for everyone, and the costs and features should be weighed with your own preferences in mind before you open a brokerage account of your own.

For example, Robinhood has no commissions for options trades whatsoever, but its platform is very light on functionality and features, which makes it appropriate for investors who don't necessarily need educational resources and just want to dabble in basic call and put trades. On the other hand, an options broker like E*TRADE charges commissions, but is packed with features and resources which could be worth far more than the commission costs for many investors.

Here are some of the main features to consider when picking the best platform to trade options below:

• Commissions-free options trades: While price isn't everything, fees can play a huge role in deciding how much you gain or lose. Many of the best options trading brokers have commission-free options trading but may charge options trading fees per contract.
• Platform usability: Some traders may see a full-featured platform as an asset, while beginner investors may see the complex interface as a liability. Find a platform that fits your specific needs and preferences.
• Educational resources: Many of the best options brokers offer a full range of educational resources, which can be extremely valuable for investors who are new to options.

Options are contracts that let investors speculate on the future price of something, typically stocks. In its simplest form, an options contract lets -- but never requires -- the options buyer to purchase or sell stocks at a predetermined price by a set date. If the buyer decides to exercise their contract, the seller must follow through.

Options can be broken down into two basic types:

• Call options: Call options let options buyers buy stock at a predetermined price (the "strike price"). When investors buy call options, they're often speculating that a stock's price will rise before the options contract expires. If they're right, they can buy their shares of the stock at the lower strike price.
• Put options: Put options let options buyers sell stock at an agreed-upon strike price. When investors buy put options, they're often speculating that a stock's price will fall before the options contract expires. If they're right, they can sell their shares of the stock at the higher strike price.

To understand these basic types, let's look at two examples.

Let's assume Stock AB has a share value of $50. You have good reason to believe Stock AB will appreciate by 20% over six months and will at that time be worth $60 a share. To act on that belief, you could buy 100 shares of Stock AB for $5,000. Or, if you didn't want to wager $5,000, you could buy call options of $50 for $2 a pop (or $200 total for 100 shares).

If you're right and the stock appreciates to $60 within six months, you would earn $10 on each option, for a total of $1,000. Minus the $200 you paid for your options, you'd be left with a profit of $800. Not bad for an initial investment of $200.

Now, let's assume another investor comes along and believes Stock AB will depreciate over six months. In this case, they could buy a put options contract with a strike price of $60 for $2 a share and 100 shares total (or $200). If they're right and the stock falls to $36, they would make $24 a share for a total of $2,200 in profit ($2,400 minus the $200 for the put contract).

Options traders typically demand more of an options trading broker than people who are simply entering market or limit orders for stocks. Active option traders may prioritize options brokers based on their selection of calculators or screeners, whereas the infrequent options user may care about commissions alone.

Some features that may be considered "make or break" when picking the best platform to trade options are listed below:

• Commissions-free options trades: While price isn't everything, what you pay to make a trade ultimately plays through to your profit or loss. It makes very little sense to place a trade where the only likely winner is the brokerage firm. Commissions have come down quite a bit in recent years, and most of the best brokers for option trading offer commission-free trading on stocks as well, but there's still quite a bit of difference within the industry when it comes to options. Many of the best options trading brokers have commission-free options trading but may charge options trading fees per contract.
• Platform: Admittedly, an options trading platform often has more to do with personal preference than anything else, as placing a trade through any brokerage is usually a matter of a few clicks. Some traders may see a full-featured platform as an asset, while beginning investors may see the complex interface as a liability. It's also important to note that some of the best options trading brokers offer a full-featured platform and an easier-to-use trading platform.
• Resources: Many of the best options brokers offer a full range of educational resources, which can be extremely valuable for investors who are new to options. As we mentioned, options can be very complex financial instruments and it is very easy to lose lots of money if you don't know what you're doing.
  

LEARN MORE: How to trade options

Commissions and fees for options trades can vary wildly even among the best option trading apps, and the difference can really add up. Here's a look at the costs associated with options trading, and how much our best brokers for option trading charge.

Commissions

Most of the best options brokers have eliminated flat-rate commissions for online stock and options trading, and just use a small fee for certain options traded. That means they offer commission-free options trades, but charge a fee based on the number of options contracts traded. Thus, it costs more at most options brokers to trade 50 options contracts than it does to trade 10 options contracts.

The most common price point is roughly $0.65 per contract, although this can be between $0 and $1.00, depending on the stock options broker. Based on the typical fee of $0.65, to buy 10 contracts, a trader would pay $6.50 to make the trade ($0.65 × 10 = $6.50). To buy 100 contracts, the same trader would pay $65 in commissions to make the trade.

And to be clear, these are commissions for online options trades. If you conduct a trade by phone, the commission could be even higher.

The table below compares options trading platforms based on the cost to buy or sell 10 options contracts.

Options trading fee comparison for 10 contracts

Commission-free options trading used to be a pipe dream for investors, but that's no longer the case with the best platforms to trade options slashing costs to attract and retain accounts. Here's an options fee comparison when trading 10 contracts for our top picks:

Options trading fees for exercise and assignment

Options trading brokers sometimes charge fees to buy or sell options, but some also charge fees if you want to exercise an option, or if an option you have sold is assigned.

• Exercise fees: Let's say you own 100 call options on Nike at a strike price of $80. Nike rises to $85 per share by the expiration date, and you decide to exercise your right to buy the stock at $80 per share. A few options trading platforms will charge you a fee to exercise your options and buy the underlying stock.
• Assignment fees: Let's say you sell a covered call on Nike at a strike price of $80. Nike rises to $85 per share by the expiration date, and the owner of the options decides to exercise them, paying you $80 per share for the underlying stock. A few options brokers will charge you an assignment fee for this transaction.

Most of the best options brokers don't charge these fees anymore. Exceptions are TradeStation, which charges $14.95 for both options exercise and assignment, and SoFi, which charges $5 If you don't plan on holding options until their expiration dates, this shouldn't necessarily be an issue, but it's still worth keeping in mind.

As mentioned before, most of the best options brokers have commission free options trading, but do charge a small fee per contract traded. Robinhood and Webull are the few free options trading platforms that have 100% free options trading, both a $0 commission and no per-contract fees for online trades. Robinhood and Webull also apply this same approach to stocks, ETFs, and cryptocurrency.

All options brokers on this list and most notable stock brokers offer many platforms from which to enact trades, including within a mobile option trading app. Ultimately, the best apps for options trading will differ by user need, but here is a rundown of our picks of the best options brokers based on their app rating.

Robinhood, Webull, E*Trade, Tradestation, and SoFi Active Investing are rated as some of the best investment apps overall by everyday users. But when it comes specifically to the best app to trade options, we think Robinhood and E*Trade are top picks to consider with this narrowed focus. These are the best apps for trading options based on a number of factors, including overall user ratings, options trading fees, simplicity to use, and the overall capabilities of their mobile app compared to full-featured online experiences.