Rating image, 5. Bottom Line Stands out as not only one of the top options brokers but also a top rated all-around brokerage with outstanding tools and and comprehensive research. Read Review. Bottom Line Caters to active traders with multiple trading platforms, while also appealing to long-term investors with thousands of mutual funds and ETFs that can be traded for free.

Ally Invest. Interactive Brokers. Bottom Line The competitive base options commission and tiered per contract pricing, alone, land Interactive Brokers a spot on this list. Bottom Line A true, options-first stock broker, that sprinkles in the ability to trade mostly stocks, ETFs, and futures.

Options come with their own unique terms, which investors should understand before making a trade: Call option: These options give you the right to buy stock at a certain price in the future. Put option: These options give you the right to sell stock at a certain price in the future.

Premium: This is simply what each option costs. Strike price: The price at which the option gives you the right to buy or sell stock.

Expiration date: The date at which the option expires. On this date, the option must be exercised, or it will expire and be worthless. Contract: Options are typically traded in lots of shares with a few exceptions. These lots of options are called contracts. For example, one call option contract gives you the right to buy shares of stock at a specified price.

How put options work Put options work in a similar fashion as call options -- the only difference is that an investor who buys put options stands to make money when the price of a stock declines. Top features of the best options brokers. 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 online brokers offer commission-free trading on stocks, but there's still quite a bit of difference within the industry when it comes to options.

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. It's also important to note that some brokers like TD Ameritrade offer a full-featured platform and an easier-to-use trading platform.

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Resources: Many 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. Comparing the best options trading platform on commissions and fees. Commissions Most of the best stock brokers have eliminated flat-rate commissions for online stock and options trades, and just use a small fee for certain options traded. The table below compares brokers based on the cost to buy or sell 10 options contracts.

Options trading fee comparison for 10 contracts No-fee options trading used to be a pipe dream for investors, but that's no longer the case with the best options brokers slashing costs to attract and retain accounts. Exercise and assignment fees Brokers 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.

A few brokerages will charge you a fee to exercise your options and buy the underlying stock. A few brokers will charge you an assignment fee for this transaction. How to pick a broker for options trading.

Open Account. FAQs What is the cheapest options broker? About the Author. Blue Twitter Icon Share this website with Twitter. Email Icon Share this website with email. Back to The Motley Fool. Robinhood Rating image, 4. Best For: Low fees.

Trade Options on Futures

TradeStation Rating image, 4. Best For: Active traders. TD Ameritrade Rating image, 5. Best For: Traders.

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Best For: Mobile platform. Trading tools aside, TradeStation offers two pricing plans for futures trading, providing traders flexibility based on trade frequency and platform access. Balanced offering Alongside the Charles Schwab website, Schwab offers customers access to two trading platforms: StreetSmart Edge desktop-based; active traders and StreetSmart Central web-based; futures trading.

Best Online Futures Broker:Discount Future Broker:Commodity Trading Account

While each trading platform has its highlights and lowlights, all in all, Schwab will satisfy most futures traders. Wikipedia defines a futures contract as "a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other. For an oversimplified example, farmer Bob operates a dairy farm. His dairy cows eat a mixture of corn and hay. Farmer Bob makes his own hay, but he buys the corn.

When corn prices are low, Bob makes more money because it costs him less money to feed his cows, which produce the milk that he sells. By using futures contracts, Bob can lock in the price of corn before the season starts to offset hedge the risk of a difficult growing season causing corn prices to spike. Farmers aside, investors trade futures contracts as a way to speculate on the future price of a security or commodity.

As one can imagine, futures are traded mostly by institutional investors, but retail investors can also speculate by using a futures trading platform. With futures trading, investors can trade everything from market indices e. Commission aside, some brokers also charge monthly platform fees and market data fees, so it is important to consider all costs before selecting a futures trading platform.

Each online broker requires a different minimum deposit to trade futures contracts. Before you can trade futures, you must apply for margin trading and futures trading approval. Interactive Brokers offers the lowest pricing, but its platform is built for professionals and not easy to learn. On the other hand, TD Ameritrade provides an excellent downloadable trading platform; however, its pricing is more expensive. For perhaps the best balance of both pricing and tools, TradeStation is a winner. Trading futures requires a funded online broker account with margin and futures trading approval.

Which Path is Right for You?

Once set up, research and determine which contract you want to trade, fill out the order ticket, then place your trade. More details: Remember, each futures contract has different margin requirements. To receive a trial login and password, sign up for the Free Trial. All you need is Internet access and a browser; no special client configurations or software installation is needed. Combine ClearTrade with an existing quotes and charts package for a complete order-routing and execution experience.

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