With all of the volatility and uncertainty in the market, investing with options can be a good strategy to limit risk or speculate on a theory without putting down too much capital. Trading with options can be risky and requires a good understanding of the underlying security and why options change in price, so many retail investors end up ignoring them completely. However, despite that potential risk and education required, there are many instances where an average investor can use options to protect or enhance their portfolio. The CBOE has a great introduction to options trading if you would like more information.
Once you know enough about options to begin trading, you need to find a place to trade them. Many well known stock brokerages also offer the ability to trade options, but before you go with your existing stock broker, you should review the offerings from all options brokers to make sure you are getting the best deal and the best support for options trading possible.
Because options trading can be very complicated, many brokers offer advanced options trading software tools to help investors place these trades correctly. If a broker doesn’t offer this and forces you to place all legs of a trade manually, it probably isn’t the best place to trade options. Another factor to consider is which software platforms are supported by the broker. Many brokers now offer the ability to trade and review your portfolio from your mobile phone or tablet, so if that is something that interests you, be sure to pick a broker with those features. Also, you need to evaluate the amount of support you need when trading, and the type of support you prefer. Many brokers offer customer service 24 hours a day via phone, email, or chat, while others only respond during business hours or are only available using certain methods of communication. Last but not least, you need to consider the costs of trading at each brokerage. The pricing structure can vary widely, and some are better suited for frequent traders, while others are more attractive to people that keep positions in place for a longer period of time, so you need to evaluate your personal strategy and choose accordingly.
After considering all of the criteria listed above, I decided that MyTrack is the best online options broker for me. It has a good education section, software that is specifically made for options trading, competitive pricing, and good support. Hopefully you’ll be able to find a broker that is just as good for you.