We reviewed and researched some of the largest online brokerages in the U.S. to rank the best ones on the market today.
For our rankings, we sent a digital survey with more than 70 queries to each company we reviewed. Our researchers verified the survey data and confirmed any missing data points by contacting each company directly and via online research.
Among all the brokerages considered, the seven that made our list excelled in areas across the 10 major categories (with weightings): trading costs, account minimum and fees, features, advisory services, insurance, customer service, education/research, security, margin interest rate and cash interest, and portfolio analysis.
- Within each major category, we considered several subcategories, combining them to give an overall score for that category which we then weighted to calculate an overall ranking of the exchanges.
- Data points were scored on a 0.00 to 1.00 scale. The top raw score was 0.70, curved to a 5-star rating as the highest possible score.
Trading costs on options commissions were scored on a comparative scale. For the account minimum and fees category, the following variables were assessed:
- New account bonuses.
- Free ACH deposits/withdrawals.
- Inactivity fee.
- Account closure fee.
- Transfer account fee.
- Domestic wire fee.
- International wire fee.
- Deposit with a bank card.
The insurance category reviewed whether the brokerage has Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) protections, additional asset protections, and additional insurance.
Why other online brokers for options didn’t make the cut
The online brokerage platforms excluded from this ranking usually fell short in terms of value-added features, such as paper trading simulators, trading idea generators and options strategy builders. Because options trading can be fairly complex, having a wide selection of these tools can help you better visualize the risk and return of your strategy and make more informed trades.
“For newbies, firms that offer a ‘paper money’ feature can be valuable to test out strategies before implementing them,” says Jason Steeno, president of CoreCap Investments and CoreCap Advisors. “Firms that offer simulated trading or the ability to visualize trades — showing max loss, max gain and breakeven — can be very helpful as well.”
Whether you’re a beginner or advanced trader, these features can also significantly enhance the user experience by automating rote tasks. Therefore, our scoring methodology assigned a higher weight to this category, with brokers that offer a wide selection of these features receiving better scores.
Our ranking criteria also placed a high weight on low trading costs, especially in terms of options commissions and per contract fees.
“Pricing for options trading has come down significantly in recent years, but if you’re paying higher per contract charges and not getting quality fills, you should be looking at different trading platforms,” Steeno says.
For options traders, especially those churning a high volume, excessive options commissions and fees per contract can potentially eat into returns. Therefore, firms that eliminated commissions and kept fees minimal received higher rankings. Like with ETFs and mutual funds, keeping expenses low is critical to successful options trading.
Conclusion: So above is the Best online brokers for options December 2023 article. Hopefully with this article you can help you in life, always follow and read our good articles on the website: credit.huyenso.com
