5 Best Online Broker Platforms For Options Traders

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Special Report: 2013 Best Online Brokers

Options trading can be simple, but can quickly get complicated. Online brokers provide customers tools to handle the tons of quotes, statistics and underlying-securities tracking they might need to succeed in trading puts and calls.

IBD's 2013 Best Online Brokers Survey found the five options trading platforms that clients rated highest. They were OptionsXpress , TD Ameritrade ( AMTD ), Interactive Brokers, Charles Schwab ( SCHW ) and TradeStation .


"Options can be used by a wide variety of investors to target a wide variety of objectives," said Jim Bittman, director of program development and a senior instructor for the Options Institute at the Chicago Board Options Exchange.

Calls And Puts

Brokerage firms have developed platforms to help options traders of all levels, from novices who buy a call or put to advanced folks who put on multilegged positions. While some platforms are bare-bones, others have a barrage of features such as streaming data, sophisticated analytics and pricing tools.

Investors can choose a platform that's Web-based or downloaded as a separate program.

A Web-based trading platform is accessed from your broker's website. These are generally less fancy and less customizable.

Downloaded platforms tend to use flashier charts and tools. They also tend to give users the ability to customize screens and layouts.

OptionsXpress, owned by Schwab, has offerings for clients ranging from beginners to more sophisticated traders. The broker's Web-based platform is not flashy, but is laid out well. It has easy-to-use order-entry interfaces under secondary navigations for single-option orders as well as spreads and covered calls.

The company also has an all-in-one trade ticket that makes entering orders with multiple options faster and easier. Just select the strategy you want to put on, and the different legs of the trade will be set up for you. OptionsXpress also has tools to help find trade ideas, as well as volatility charts and price calculators.

TD Ameritrade also offers a basic, Web-based platform that has something for every level of investor. Order entries for single options, covered calls, spreads and strangles can easily be accessed under a secondary navigation.

For single options orders, you can choose an exchange to handle the order or you can have it done automatically. Whether you're putting on a spread, strangle or straddle, you easily get quotes for those trades as a package rather than viewing them in individual legs.

On The Screen

For traders who want more advanced features, TD Ameritrade offers the Trade Architect and Thinkorswim platforms.

Trade Architect is a Web-based platform catering to active investors, who can select a strategy and get profit-and-loss graphs to see how the trade can play out.

Thinkorswim, which requires a download, is TD Ameritrade's platform for advanced traders. Packed with sophisticated features, investors can monitor the market and place trades in one screen. Complex strategies can be easily placed, and investors can switch layout views to see implied volatilities and probabilities.

Interactive Brokers has two platforms for customers. One is its Web Trader platform, which has just the basics for viewing option chains and entering orders.

The company also offers a much more advanced tool for options traders. Interactive Broker's OptionTrader, which is within its Trader Workstation platform, lets users view options chains, including key statistics such as implied volatilities and greeks -- a term that refers to delta, gamma and other measures of options' sensitivity to various factors. Orders for single options or combination orders can easily be entered. Buttons are conveniently placed to reverse a position or hedge it from price risk.

RELATED:

How Top Broker Rankings Were Calculated In IBD Survey

Online Stock Broker Clients' Top 12 Wish-List Items



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Investing Ideas

Referenced Stocks: AMTD , SCHW

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