Best Options Trading Platforms 2022

From 2020 to 2021, work-life norms were turned upside down as people around the world struggled to deal with unprecedented pandemic restrictions. As the new work from home trend gained traction and households were flooded with government assistance, a new generation of retail traders discovered the leverage that options offer. 2020 to 2021 was a time of record trading volumes in the options market, with retail traders accounting for 25% of the volume in 2021. In 2022, however, an unfamiliar regime of more restrictive monetary policies has turned the tide on all market participants, forcing many to discover that stocks often fall faster than they rise. In this review, we examine the best online brokers for trading options to help investors decide which platform offers the best mix of education, speed, costs, tools, research, and more to fit their needs.

Best Brokers for Options Trading:

tastyworks: Best Options Trading Platform

Why We Chose It

We chose tastyworks as the Best Options Trading Platform because of their highly competitive options trading commissions, excellent options trading tools, and superb options-focused education and live video content.

Overview

Tastyworks, launched by tastytrade in 2017, was created by the same people that created and developed TD Ameritrade’s excellent thinkorswim® application. The founders were inspired to create a platform allowing self-directed retail traders to have access to markets and sophisticated analysis tools. Tastyworks is designed more for active investors/traders and only offers stocks, ETFs, options, and cryptocurrency trading. 

Tastyworks has very competitive fees for trading options. While they charge $1.00 per contract to open each leg of an options trade, they cap fees at $10 per leg for any option trade, regardless of trade size. A $0.10 per contract for clearing fee is also charged. Unlike most brokers, tastyworks does not charge commission for closing positions. This results in tastyworks having very competitive fees for options trading, as many brokers charge on both the open and closing option, and do not put a cap on fees at all. 

For example, opening and closing a 50 lot vertical call spread (total of 200 contracts traded to open and close the position) would cost just $40 at tastyworks—the maximum of $10 per leg for the two legs ($20), plus the $0.10 clearing fee for 200 contracts ($20). The same trade at E*TRADE, for example, would cost $100 using their $0.50 fee per contract for higher volume/frequency traders. The same vertical spread trade for 100 contracts would result in fees of $60 at tastyworks ($20 for the two legs and $40 in clearing fees) and $200 at E*TRADE. Tastyworks is competitive on price for all options traders, but it gets more competitive for high-volume, high-frequency traders.

Along with these low commissions, tastyworks does not skimp on options analytics, platform workflow, or trade input. Tastyworks’ strong options analytics includes the Greeks for specific multi-leg strategies, profitability graphs for options positions, and an easy order entry that automatically sets up the trade structure when specific options strategies, such as a vertical spread or butterfly, are chosen using an intuitive drop down menu. From there, it is easy to change the expiration dates and strike prices for a chosen options strategy. The platform also provides probabilities for the potential profitability of various options strategies. 

Tastyworks’ desktop and mobile platforms are designed to closely resemble the look and feel of each other for consistency, although some things have to be tweaked to account for the smaller screen size of the mobile app. While tastyworks provides real time streaming quotes, it does not provide fundamental research or live streaming news. Tastyworks does offer a Follow Traders feature, which allows users to follow the trades of their in-house celebrities. Tasyworks’ customer service is well regarded by customers for having prompt and capable support, with Trustpilot showing a 4.4/excellent rating from more than 100 reviewers.

TD Ameritrade : Best Broker for Mobile Options Traders

Why We Chose It

We chose TD Ameritrade to win the Best Broker for Mobile Options Trader category primarily on the strength of the outstanding options analytics, research amenities, and trading tools delivered by its thinkorswim® mobile app.

Overview

TD Ameritrade is the new winner in the Best Broker for Mobile Options Traders category this year, unseating last year’s winner, tastyworks. This has been a very tight race between the tastyworks and thinkorswim® platforms in recent years, but it was tastyworks’ lack of news and fundamental research that allowed TD Ameritrade to climb into the lead.

TD Ameritrade is a full service online broker well known for its excellent educational resources that provide customers with the basics of investing and beyond. The company was founded in 1975, and was purchased by Charles Schwab in 2019. TD Ameritrade also offers a broad range of asset classes, and the different platforms will satisfy the needs of all investors, whether active or passive traders. Although their options commissions are higher than some of the other online brokers more focused on trading stocks and options, having access to a full set of financial products on one platform may be worth it.

The thinkorswim® desktop application can be customized by the user, and generally has more functionality than the web and standard mobile platforms. That said, TD Ameritrade’s thinkorswim® mobile app makes a decent attempt at replicating its robust desktop version. thinkorswim® mobile has watchlists, streaming real-time data, and supports charting and trading directly from charts. It does not support the ability to draw trend lines, but charting is still much better on the mobile thinkorswim® app than on the standard mobile app. Consequently, options traders will be using thinkorswim® mobile as their primary mobile experience.

Being very similar to the desktop thinkorswim®, the mobile version allows users to trade multi-leg options. Traders can choose to rely on TD Ameritrade’s order routing technology or direct their orders to specific exchanges. Traders also have the ability to backtest trading strategies and set orders to trigger automatically when certain criteria are met. 

As with E*TRADE, TD Ameritrade is not specifically an options platform. It has a larger universe of offerings and comes with extras that include robust customer service options, industry leading educational resources, and tools that go beyond trade analysis to assessing your overall financial situation. Within that larger universe of offerings, however, thinkorswim® mobile is a standout experience for options traders looking to access markets on the go.

Interactive Brokers: Best Broker for Advanced Options Traders

Why We Chose It

Interactive Brokers (IBKR) takes the top spot as the Best Broker for Advanced Options Traders this year because of its low options commissions, ongoing enhancements to its already superb trading and analytical tools, and its long-standing commitment to efficient order execution.

Overview

Interactive Brokers is the new winner in the Best Broker for Advanced Options Traders category this year, taking over the reins from last year’s winner, tastyworks. This is due to a combination of tastyworks still not offering streaming news or fundamental research and IBKR simply continuing to progress in its efforts to build a best-in-class platform.

The company was founded in 1978 by its current Chairman, Thomas Peterffy, under the name T.P. & Co. The company created the first handheld computers used for trading markets, and began selling its services to the public in 1993 when Interactive Brokers Inc. was incorporated as a US broker-dealer. In that time, IBKR has become the clear choice for sophisticated traders because they make pretty much every security type in most markets available on a single platform. 

In 2021, IBKR launched IMPACT, a trading application that aligns investor values with their investments, and Global Analyst, an online tool that helps investors find undervalued companies. The company has also developed many innovative tools to better analyze and automate the trading process, and it supports options trading globally in more than 30 market centers.

Interactive Brokers has low options commissions for active traders, ranging from $0.15 to $0.65. That said, $0.65 per contract is the commission for customers trading less than 10,000 contracts per month, so this puts IBKR on the high side for lower volume options traders. There are break points for trading larger volumes per month that also vary with the premium, but you’ll need to trade more than 100,000 contracts per month to hit the $0.15 per contract commission. Interactive Brokers also has superior execution, allowing its large clients to route their own orders while also providing customers commission free trading (not including options) that comes with payment for order flow. 

Interactive Brokers has developed some excellent options analysis tools that are also available on the mobile application. These tools include options spread templates to easily compare similar strategies to find the one with the best risk/return profile. IBKR Mobile also has one-tap options strategies that allow the trader to easily make changes to various legs of the strategy, as well as showing key options Greeks on the quote page and allowing fine-tuning of strategies through the adjustment of filters. In addition to futures options spreads, Interactive Brokers also allows traders to exercise all or some options, and provides helpful indicators to help the trader determine if an early options exercise would be beneficial. 

In addition to these tools, Interactive Brokers provides traders with tools to graph potential payouts on options strategies, as well as tools to estimate the probability of an option becoming profitable. Other tools specific to options at Interactive Brokers include a write option tool that scans your stock positions and calculates the number of covered options to write against the uncovered stock, and rollover tools for options about to expire. There are also options analytics that allow traders to manipulate options pricing data such as price, time, and implied volatility. Finally, Interactive Brokers’ Options Portfolio continuously and efficiently scans market data to identify low cost options strategies in line with the objectives of the user. It is, quite honestly, a lot for even experienced traders to take in, but it is a welcome sight for advanced traders looking for the full toolset. 

E*TRADE: Best for Beginning Options Traders

Why We Chose It

We chose E*TRADE as the best options broker for beginners because of its excellent investor education tools, incredibly intuitive platform design, and top-notch customer service.

Overview

We chose E*TRADE as our Best Broker for Beginning Options Traders because, even though it charges higher fees than other online brokers focusing on the options trading space, E*TRADE has powerful desktop, web, and mobile platforms that are also easy to use and meet the needs of both beginner and expert investors and traders. E*TRADE was established in the early 1980s as one of the first online brokers and was purchased by Morgan Stanley in 2020.  

E*TRADE has excellent tools and analytics, and a wide range of educational materials on options and other investing concepts to help new options traders learn. Another great benefit of E*TRADE to new options traders is the ability to paper trade, so users can practice and try various options strategies before committing their own capital in the market.

It is important to note that there is a difference in fees that becomes more stark as trading volumes increase because E*TRADE charges fees on both sides of the trade, with no maximum fee. A vertical spread trade for 10 contracts would cost $20 for an active E*TRADE trader, while on tastyworks the fees total $14. Once trading volumes increase, the differences become very apparent as a 100 contact spread trade would result in a commission of $200 at E*TRADE but only $60 on tastyworks.

E*TRADE is, of course, more than just options, and holds its own against many of the large full service brokerages across a wider set of asset classes. In addition to its options trading capabilities, E*TRADE provides customers with streaming quotes, news, fundamental stock research, and multiple screeners for stocks, ETFs, mutual funds, and fixed Income in addition to options. So, while E*TRADE may be at a cost disadvantage for high-volume, high-frequency  options traders, it is a complete solution for investors who have a traditional portfolio of stocks, funds, and bonds, but are curious to expand into options trading for the first time.

Webull: Best Broker for Low-Cost Options Trading

Why We Chose It

Webull is our choice to win Best Broker for Low-Costs Options Trading category because it levies no (direct) costs on its users, while still providing very capable trading and analytical features.

Overview 

Webull started operating in 2017 and released its mobile brokerage platform in 2018. It’s mobile-first strategy reflects the company’s target market that skews young, embraces technology, wants information on the go, and are active, self-directed traders. Webull has added Cboe products to its platform, including S&P options (SPX), Cboe Volatility Index (VIX) options, and Mini-S&P 500 Index options. Webull added fractional share trading to its platforms in 2021 and commission-free over-the-counter (OTC) stock in 2022.

Webull has a narrow focus, offering customers access to just stocks, ETFs, options, and cryptocurrencies. While they don’t charge customers commissions/fees on these assets, Webull still provides some excellent tools and features, including streaming quotes, news, and both technical and fundamental analysis. Webull also publishes market calendars and provides a breakdown of ratings from multiple analyst ratings using very clear and easy to understand graphics. The platform does not offer trading in mutual funds or fixed income.

Webull’s desktop and mobile platforms are easy to use. Webull has a stock screener that has multiple filter options, and a customized screen can be saved and turned into a watchlist. Webull has made recent enhancements to already good charting capabilities, and also provides tools to help construct the most common one, two, and four-leg options strategies, such as vertical and calendar spreads, straddles/strangles, and butterflies/condors. The platform also allows the user to bring up a payout graph at maturity for the strategy, as well as tools to further customize the option strategy by changing strike prices and maturities.

Since there are no commissions or fees charged to the customer, Webull is transparent in that they accept payment for order flow to generate revenue. Webull also generates revenue on customer cash balances because they do not offer interest on idle cash. Webull recently added options trading capabilities as part of its paper trading platform, to go along with its existing stocks and ETF simulators, although the functionality is currently limited to single-leg option strategies. This means you would have to purchase each leg of an options strategy as individual single leg options, instead of entering a single order for a spread that can be done on the main,  non-paper trading platform. 

Considering many brokers still charge fees on both opening and closing options positions, the difference in costs will add up, especially for very active, high-volume traders. This makes Webull an online broker worth considering, especially for higher volume traders.

Final Verdict

As the significant increase in retail options trading has forced online brokers to compete even harder for customer business, it has spurred the development of some fantastic product innovations, deeper pricing cuts, and easier pathways to creating sophisticated options strategies. While tastyworks has some work to do to regain the rank it lost in our redesigned methodology, which gives the highest weighting to research amenities, its competitive commissions, options-focused content, and optimized options tools are strong enough to keep it sitting at our best overall pick. 

Webull’s free option trading coupled with a solid platform is also worth looking at for options traders who understand the market and don’t require as much education and trading support. E*TRADE impressed us with its enhancements this year, making the ongoing competition between it and TD Ameritrade in the areas of best mobile and best beginner platforms even tighter. Finally, in the eyes of sophisticated traders that understand options trading and trade the larger positions needed to create favorable commissions, the edge offered by Interactive Brokers is about as good as it gets.