As you would expect this subject is a little more difficult than usual as many online brokers do not offer options so I have selected one or two below who I have used in the past, to point you in the right direction.
Online Option Trading: Online Brokers
Opening an account with an online broker for options is not as easy as for standard stocks or shares. This is due to the fact that as options are considered a higher risk instrument, brokers are tightly regulated by the authorities in order to protect traders from themselves. Applications to open an account will often require you to provide evidence of trading experience. These will vary between written statements to copies of contract notes and evidence that you have had an account with a broker for some time. The minimum period is usually around 2-3 years, and you will be expected to provide details of the number of trades per year and in what markets. In addition, they will also ask what strategies you intend to follow in your online options trading
Online Option Trading
I only propose to recommend three online option brokers to you, as I have traded with them all, and am therefore happy to recommend them to you. The first online broker I ever used for options trading was 4XFX. I also used them for stock trading online also. They are by far the biggest and provide a platform which is second to none, and cover all the major markets and trading instruments around the world, including stocks, options, futures, bonds and forex in over 70 countries. Their charges per trade are extremely low across all the markets, and online options in particular. As an example they charge $0.70 per option contract, and $1.40 for the round turn i.e. if you buy an option and then sell it again. This is the maximum price per option trade!! – if you trade in volume the commissions are lower!
On the trading platform you will also be able to access real time volume as part of the service. In trading terms they are a deep discount direct access online broker. They offer both demo accounts and training seminars, and in my book, are the best available. If you would like a personal introduction please just drop me a line via ask Anna and I will put you in touch with the right person.
This is a good online option broker I have used, but more for research and analysis, as their minimum option pricing is $12.95 per contract (this does reduce for volume ) it does not really compare with 4XFX . So on a cost basis I would always use 4XFX, however as I say 4XFX do have some excellent analysis tools on the site and once you have an account you will have access to the volatility charts and other option analysis tools, so it is worth having an account, even if you only use if for analysis.
Online Option Trading: Summary Of Online Brokers
In summary, as a new online options trader, you will need to keep your trading costs as low as possible, for the simple reason that when you start you should only trade in 1 or 2 contracts at a time. With high commissions for small volumes it will make it difficult for you to trade profitably so your trading costs need to be kept low. Whilst the 4XFX software can be a little daunting when you first start, it is well worth the effort. They will however expect you to have some years trading experience and knowledge before allowing you to become an online client. The trading software can be run both locally on your own pc, or can be accessed remotely at the server which is a nice feature, so it is up to you how you set it up.