2020 was a volatile and industry-changing year. Starting with the pandemic and all the way to the US election, everything impacted the online brokerage industry.
Given all these incidents, we felt the necessity to help beginner investors find the best Options trading platforms for 2021.
For a beginner, to find the best options trading platform, it is significant to look for a broker with these three features:
- The broker should have an easy-to-use, beginner-friendly trading platform.
- The trading platform should provide access to advanced market research tools.
- The broker should offer educational materials, real-time quotes, and the best possible customer service.
Keeping these points in mind, we committed ourselves to find the overall best options brokers for beginners and everyone else.
Summary of Best Options Trading Platforms for Beginners
|Trading Platform||Best For||Our Rating (out of 10)||Minimum Deposit||Promotion||Commission|
|TD Ameritrade||Best for beginners||10||$0||None||$0 per trade|
|E*TRADE||Best web-based platform||9||$0||$50 or more |
(when opening an account, with code: WINTER21)
|$0 per trade|
|Merrill Edge||Great research tools||8.5||$0||Up to $600|
(cash credit with qualifying deposit)
|$0 per trade|
|Robinhood||Easy to use but lacks tools||8||$0||One free stock|
(for new account owners)
|$0 per trade|
5 Best Options Trading Platforms for Beginners
1. TD Ameritrade
TD Ameritrade is the overall best options trading platform for beginners and one of the best brokers for online stock trading, long-term investing, and retirement planning.
This broker offers competing fees, excellent resources, and a wide range of investment options, alongside several platforms to choose from (website, mobile apps, and thinkorswim); that makes it a fitting choice for everyone, especially beginners.
TD Ameritrade Outstanding Features
1. No Minimum Opening Deposit:
Whether you want to start investing with $20 or $100, TD Ameritrade doesn’t limit you. Since this broker has no minimum investment, beginners can immediately start trading by putting in just a small amount of money.
2. No Commission:
To keep up with other competitors and increase customer satisfaction, In October 2019, TD Ameritrade also eliminated commissions.
3. Different Investment Types:
Using TD Ameritrade, you can invest in Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, and Futures.
4. A Wide Range of Accounts Types:
This broker offers just any account type you can think of: Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Solo 401(k), Trusts, Limited Partnerships, Partnerships, Coverdell, 529, Custodial, Annuities, Money Market, and CDs.
5. Trading Tools:
TD Ameritrade offers the best trading tools and platforms in the industry. Its Thinkorswim Trading Platform is rated as the number one trading platform by Barron’s.
The broker’s mobile trading platforms are also valuable. These mobile platforms are available for smartphones, tablets, and even smartwatches, enabling you to trade on-the-go.
6. Tax-loss Harvesting:
An absorbing feature of this broker is its tax-loss harvesting. This feature enables customers to minimize losses by applying tax-efficient strategies.
7. Access To Advanced Research Tools & Reports:
This broker has always tried to keep its customers up-to-date and rich in resources. That is why it offers access to trading and investing reports from Jaywalk Consensus, Research Team, Market Edge, S&P Columns, and S&P Research.
And recently, TD Ameritrade also partnered with New Constructs to let its customers access reports and ratings from its courtesy.
Downsides of TD Ameritrade
At times, due to the overload of tools and content, it may be overwhelming to find what you are looking for.
2. All Tools Not in One Place:
TD Ameritrade does a good job by offering multiple platforms, but each of these platforms lacks something.
For example, options-specific tools are easily available on thinkorswim, but tools for equities and fixed income are available on the website.
A commission of $6.95 per trade is applied to over-the-counter (OTC) trades. Unless clients move cash into money market funds, they receive a small portion (0.01–0.05%) of the uninvested cash.
TD Ameritrade Pricing & Fees
This broker joined the cult of commission-free brokerages in 2019. It means that the only fee you will have while trading stocks, ETFs, and options is the 65-cent contract fee.
Also, a flat fee of $25 subjects to broker-assisted trades.
There are hundreds of no-transaction-fee mutual funds; however, if an investor trades a no-load fund (out of the list), a fee of $49.99 per trade subjects to him.
Finally, a fee of $2.25 per contract, besides exchange and regulatory fees, will be subjected to futures and options on futures.
E*TRADE is one of the best options brokers because of its easy trading and beginner-friendly platform. It is a subsidiary of Morgan Stanely and offers trading on various assets, including stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed-income investments.
This broker has one of the best web-based options trading platforms, making it a great choice for any beginner stock investor.
Aside from its highly intuitive computer-based platforms, E*TRADE also offers two mobile apps that will surely appeal to any investor’s style.
The Power E*TRADE platform of this broker consists of powerful tools that help beginner traders find and develop new trading strategies.
Not to forget about E*TRADE Pro, this platform offers real-time streaming and high-level charting tools.
E*TRADE Prominent Features
1. No Minimum Investment:
This is one main reason that puts E*TRADE in the list of best options trading platforms for beginners.
A “no minimum investment” allows beginner traders to try the platform out with even a small deposit before aiming for high amounts.
2. Various Investment Types:
E*TRADE lets you invest in many different assets, including Stocks, OTC/Penny Stocks, ETFs, Mutual Funds, Bonds, Options, Forex, and Futures.
3. Reasonable Amount of Accounts Types:
E*TRADE doesn’t offer as account types as TD Ameritrade, but still, it supports a moderate number of account types: Taxable, Joint, Traditional IRA, Roth IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Solo 401(k), Trusts, Coverdell, and Custodial.
4. Apple Pay Functionality:
This broker supports Apple Pay for E*TRADE debit cardholders, making the payment easier for Apple users.
5. Power E*TRADE Pro:
This advanced platform offers amazing features that make trading much more efficient for all traders.
This platform comes with: point-and-click order entry, real-time streaming, high-level advanced trading tools, sector and industry tracker, and market scanner for more trading ideas.
6. Commission-free trades:
Like many other trading platforms, E*TRADE also has eliminated commissions on online stock, options, and ETF trades.
7. Suitable for Beginners, As Wells As Professionals:
No matter what is your investing level (beginner or professional), E*TRADE accommodates well and can perfectly satisfy your needs.
1. Higher fees for less frequent traders:
While this broker charges $0.50 for traders with more than 30 options trades per quarter, it charges $0.65 per contract for traders who don’t qualify for this.
2. Lacks direct access to international markets:
This broker is not a fit choice for investors who want to trade foreign currencies or have direct access to global markets.
3. No syncing of external accounts:
Many E*TRADE competitors offer to sync external accounts; however, this broker does not. This feature is useful to get a complete idea of your whole net worth.
E*TRADE Commission & Fees
As mentioned earlier, E*TRADE does not take commissions on online stock, options, and ETF trades. However, there is a fee of $.65 per contract for options trades.
If an investor chooses to trade before or after market hours, an ECN fee of $.005 per share will be subjected.
E*TRADE charges $6.95 for penny stocks. However, competitors of E*TRADE like Fidelity and Charles Schwab charge no commission for penny stocks.
3. Merrill Edge
Part of Bank of America, Merrill Edge is one of the best options trading platforms for active traders and research-focused traders.
This broker offers high-quality research and tons of free stocks and ETF trades, as well as more than 4,000 customer support locations (Bank of America locations) around the U.S.
The greatest advantage of this broker is obvious: it is part of Bank of America. This bank is one of the leading banks in America and one of the world’s largest financial institutions with vast capabilities.
For users of this bank, it is quite easy and affordable to create an Merrill Edge account and start trading.
On top of that, the bank offers discounts on mortgage origination, free ATM transactions, and increased interest rates on uninvested cash for its users if they start a Merrill Edge trading account.
Outstanding Features of Merrill Edge
1. Best Customer Service:
The fact that this broker is part of BofA and its users can get customer service in each of 4,300 locations of the bank, automatically makes this trader the best customer service provider in the industry.
2. Great Analysis Tools:
The comprehensive analysis tools this trading platform provides enables users to get a complete picture of how their assets are working.
3. Integration with Bank of America:
Users with certain qualifications (BofA user with $20,000 assets combined in Merrill Edge) will be offered extra bonuses that can help earn more money and save on expenses.
4. Excellent Research Tools:
Merrill Edge offers access to profitable and useful third-party reasearches and reports about investing and trading. This can help its customers learn the fundamental investing knowledge necessary for every trader.
5. Various Trading Platforms:
This broker offers three platforms. (1) Full site HTML experience, (2) Merrill Edge Mobile App (iOS and Android), and (3) Merrill Edge MarketPro. Traders can try each platform and choose the one that best suits their investing style.
6. Different Tradable Securities:
Merrill Edge supports trading these securities: stocks, Bonds, Mutual funds, ETFs, and Options.
7. No Commission:
Merrill Edge is also a member of the no-commisson on options trades cult.
Downsides of Merrill Edge
1. High Options Fees:
Compared to other trading platforms, the per-contract options fees of this broker is high.
2. High Margin Interest:
This broker is not suitable for investors who rely on margins as an integral part of their trading. That is because its margin rates are on the higher end of the discount brokerage industry for all customers.
3. Two Legs Limitation:
Options spreads traded online is limited to two legs, and to remove the limitation, you would have to phone the order into a live broker.
4. Lacks futures, futures options, or cryptocurrency trading:
Unfortunately, you cannot trade futures, futures options, or cryptocurrency trading using Merrill Edge.
Merrill Edge Commission & Fees
Like its other competitors, Merril Edge also doesn’t take any commission for trades on ETF, stocks, and options. However, there is a fee of $.65 per contract for options (which is restricted to two legs).
Merrill Edge doesn’t allow penny stock trading. In other words, it does not let trade on stocks priced below $5 per share, have limited financial disclosure information, or have fewer than a $300 million in market cap.
Robinhood is one of the best trading platforms for investing in stocks, ETFs, cryptocurrencies, and options.
This broker’s fame is mostly related to its commission-free trading; however, many other brokers have joined it and eliminated commissions.
Its recurring investment features, along with the opportunity to trade cryptocurrencies, make this broker one of the outstanding trading platforms.
Robinhood offers web and mobile trading platforms; however, top-tier investors may find these platforms short on tools.
Robinhood has more than 10 million accounts held mostly by young traders who use this broker to start their investing journey.
This large number of users led to trading activity surges during February and March last year, which caused some Robinhood traders to experience extensive outages.
Robinhood Outstanding Features
1. Low Fees & Zero Balance Requirements:
Robinhood was the first broker to announce a no-commission policy for trades in stocks, ETFs, cryptocurrencies, and options.
The broker also requires zero balance (no minimum deposit) to start an account. This feature allows beginner traders to try out the platform with even a small amount of funds.
2. Fractional Shares:
This is an interesting feature useful for all traders but especially beginners. So basically, fractional shares allow you to invest a small amount (like $5) to buy a portion of a share, even if the actual price of that share is thousands of dollars.
3. Recurring Investment:
How do you want to make things automatic? Robinhood lets you do it. Choose a time (daily, weekly, every 10 days) and an investment amount, and this broker will automatically invest the amount you choose when you want it.
4. High-yield savings:
Robinhood offers a cash management account that comes with a debit card and a free ATM and pays 0.30%.
5. Robinhood Gold:
You can use this feature to trade on margins with just a monthly fee of $5. However, while trading on margin, don’t forget about the risks that come with it.
Downsides of Robinhood
1. Delayed Quotes:
In investing, up-to-date data is crucial, even if it is about one or two seconds. Robinhood does update prices on all platforms, but other real-time data providers are typically late by several seconds.
2. Little Research and Resources:
For new investors and beginner traders, access to a wide range of researchers and resources is fundamental. However, Robinhood is not very good at providing such services.
3. One Account Option:
This broker only supports individual taxable accounts for investing. So, if you want to start investing with a tax-advantaged account, like a 401(k) or IRA, Robinhood is not a suitable choice.
4. Customer Support:
Many investors expect a phone support option from brokers they want to invest in. There will surely come an urgent situation where an email is not fast enough. But unfortunately, this broker only offers support through email.
Robinhood Commission & Fees
This broker was the first to offer no-commission for trades on stocks, ETFs, options, or cryptocurrency.
Robinhood is completely free, but they earn money by selling customers’ order flow to wholesale market makers. In case you didn’t know, except Fidelity, all other brokers engage in the same practice.
Best Options Trading Platforms For Beginners Pricing Comparison
|Feature||TD Ameritrade||E*TRADE||Merrill Edge||Robinhood|
|Options Base Fee||$0||$0||$0||$0|
|Options Per Contract Fee||$0.65||$0.65||$0.65||$0|
Best Options Trading Platforms For Beginners Education Comparison
|Feature||TD Ameritrade||E*TRADE||Merrill Edge||Robinhood|
Options Trading FAQs
How do Options work?
Options are derivatives that give its holder the right (but not the obligation) to buy or sell a specific amount of an asset (usually 100 shares) for a certain amount of money before or at the expiration date.
What are different types of Options?
There are two types of Options:
Call Option: This contract gives its holder the right to buy a specific amount of an asset for a certain price.
Put Option: This contract gives its holder the right to sell a specific amount of an asset for a certain price.
How to Trade Options?
You can trade options on an options trading platform. You can find 4 best options trading platforms for beginners in this article. Go through their upsides and downsides to find the best fit for yourself.
What happens if an option expires out-of-the-money?
Out-of-the-money options expire worthless. That means you didn’t use the option because that would have made you even bear more loss; so, you let the option expire.
What are the moving averages in options trading?
The moving average (MA) is a technical analysis tool that eases price data by creating a regularly updated average price. The average is taken over a particular period of time, like 5 days, 30 minutes, 10 weeks, or any time period the trader chooses.