Best Brokers for Stock Options

Advice on Choosing a Stock Options Broker

There are many places on the internet that recommend options brokers, and some of these places will label a single broker as the best there is. Any recommendation is ultimately down to a matter of opinion, to some extent at least, and we understand why some experts prefer to promote a single broker: particularly if they have had a lot of experience with that particular broker.

However, it's our opinion that it's not possible to determine what the single best online options broker is as some attributes of a broker will be important to some traders, while others may be looking for other qualities. For example, a particularly active trader would probably have different requirements from a broker than someone looking to use auto trading services.

This is why we have created a number of different categories of brokers and made suitable recommendations for each of those categories. On this page we focus on the best options brokers for traders that mostly trade stock options: making recommendations and also providing some additional advice to help you choose the right broker. Our advice covers the following points.

• Cheapest is Not Always Best
• Put Your Money to Use
• Good Service Matters
• Consider Multiple Brokers

Cheapest is Not Always Best

One of the first things a lot of traders look for when deciding which online broker to sign up with is the costs involved, primarily the commission charge per trade. The costs are certainly a very important consideration, but they shouldn’t necessarily be the only consideration. The cheapest broker is unlikely to be the best broker as ultimately you do tend to get what you pay for.

If you are comparing two brokers and one offers everything you want from a broker but is a bit more expensive than the other one, which lacks some of what you want, then the extra cost is almost certainly going to be worth it.

You should also be sure to look a little deeper than simply the headline commission rate that a broker advertises. There may be terms and conditions you have to comply with to get the advertised rate, such as a minimum number of trades or having a certain level of funds in your account at all times. You may also find that only certain types of orders qualify for the advertised commission rate, and other orders may be more expensive. You really need to check these sorts of things out when you are selecting your online options broker.

It should also be noted that commission charges aren't the only costs that you might incur while using a broker. Some brokers add fees for a whole range of different things: such as annual account fees or fees for withdrawing funds. Some might even charge you a fee if your account is dormant for any length of time. If you aren't careful, these fees can potentially add up to quite a significant sum. So you should make sure you know exactly what the deal is before going ahead and signing up with a broker.

Put Your Money to Use

This might seem pretty obvious, as any trader or investor should recognize the importance of putting their money to good use at all times. However, in this context we are making a specific point. It isn't necessarily one of huge significance, but it is nonetheless something that is worthy of consideration.

Some online brokers will pay you interest on any funds in your brokerage account that you don’t have tied up in a trade. A lot of traders do tend to have some unused capital in their account most of the time and a little bit of extra return is always welcome, so it's worth checking to see if a broker does offer these interest payments.

Good Service Matters

Good customer service is frequently completely overlooked by traders when they are choosing an online broker, but it really shouldn’t be. While the level of customer service you receive is unlikely to have a direct impact on your success as a trader, good customer service can certainly make your life easier.

If you stick to reputable options brokers then you probably won’t encounter too much in the way of problems, but chances are you will have the occasional issue to deal with or question that you want answered. The best online services, such as those that we recommend, will provide quality customer service and be on hand to assist in you such instances. When you are looking at different options, you might want to take a look at whether there are alternative ways to contact customer service that suit your requirements.

Consider Multiple Brokers

It often doesn’t even occur to traders to use more than one broker, but it can be a good idea in some circumstances. Admittedly it's rarely an ideal solution, because there are obvious advantages to doing all of your trading with just the one broker, but it's not something that should be ruled out.

If you can’t find a single broker that offers you everything that you need, then it may well be worth considering splitting your activity between two different brokers. Remember, though, a lot of brokers require minimum deposits so this is something you might need to take into account if you are splitting your capital across two accounts.

Summary

The key to finding a good online options broker is basically just to do your research. You should have a clear idea about what is important to you and what it is you are looking for, so it really is as simple as checking out some different brokers and determining which one is the best fit for you. Of course, there are a huge amount of brokers on the web and it wouldn’t be practical to research them all.

This is one of the reasons why we have provided our readers with recommendations of services that we believe are of a particularly high quality. We are confident that you will find a broker that is suitable for you among those that we recommend.