As an options trader, choosing the right trading software is crucial to your success. With so many platforms available, deciding which one best suits your needs can feel overwhelming. Carefully evaluating costs, ease of use, tools, and customer support will ensure you select optimal software to execute your options strategies. In this article, we walk through a detailed comparison of the top options trading software to consider based on your trading style and experience level. With the right technology platform, you can gain an edge in the options marketplace and take your trading to the next level. Weigh the pros and cons outlined here as you determine which solution will become an indispensable part of your trading toolkit going forward.
What Is Options Trading Software?
Options trading software refers to digital platforms and tools designed specifically for trading options contracts. These platforms provide options traders with a centralized hub to research, analyze, and place options trades.
Research and Analysis Tools
Most options trading software includes tools for researching and analyzing potential options trades. This includes options chains to view available contracts, volatility charts, risk graphs, and pricing models to determine fair value. Traders can screen for options based on specific criteria like expiration date, strike price, and Greeks. Some platforms also offer educational resources to help traders better understand options strategies and the mechanics of options contracts.
Trade Execution
In addition to research and analysis tools, options trading software also provides an interface for placing options trades. Traders can view real-time streaming quotes for options contracts, customizable charts to identify entry and exit points, and put on complex options spreads with just a few clicks. Many platforms also allow traders to stage orders for later execution, backtest strategies, and set up automated trading algorithms.
Brokerage Integration
Options trading software is often offered by brokerages to provide an all-in-one solution for their clients. The software seamlessly integrates with the brokerage account, allowing traders to fund their account, view balances and positions, and streamline the options trading process from analysis to execution. Some third-party platforms also integrate with major brokerages, though they typically charge additional fees for their more advanced tools and resources.
For options traders, trading software can be an invaluable tool for improving efficiency and profitability. The platform you choose will depend on your options trading experience, strategies employed, and personal preferences. With many great options available, new and experienced traders alike can benefit from options trading software.
Features to Look for in the Best Options Trading Software
Robust Analytical Tools
The top options trading platforms offer robust tools for analyzing the market and evaluating options strategies. Look for software with options analysis functions like probability analysis, volatility analysis, risk analysis, and strategy optimization. These tools help assess the risks and potential rewards of different options positions so you can make informed trading decisions.
Automated Strategy Building
The best options trading software automates the process of building options strategies. It should allow you to screen for stocks or options based on your criteria, then quickly evaluate different strategies like covered calls, credit or debit spreads, straddles, and strangles. The software suggests appropriate strategies based on your market outlook and risk tolerance. Some platforms even allow you to automate your options strategies for execution.
Advanced Charting and Technical Analysis
Strong charting and technical analysis capabilities are essential for successful options trading. Look for software with advanced chart types like candlesticks, ability to add technical indicators like moving averages or Bollinger bands, and drawing tools for chart pattern analysis. Some platforms also offer backtesting to see how well different technical trading strategies would have performed historically.
Customizable Interface and Alerts
Leading options trading software provides a highly customizable interface where you can create tabs, windows, and layouts tailored to your needs. You should be able to set up watchlists to track specific stocks or options and create price alerts or screeners to notify you of trading opportunities that match your criteria. Customizable software helps streamline your workflow and keep you focused on the market.
With powerful analytical tools, options strategy automation, advanced charting, and a customizable interface, the best options trading platforms provide sophisticated yet intuitive software to help you trade confidently and efficiently. Comparing a few of the top-rated platforms can help determine which solution is the best fit for your trading needs and style.
Top 5 Options Trading Platforms Reviewed
When getting started with options trading, one of the most important decisions is choosing a reliable trading platform that suits your needs. Here we review five of the top options trading platforms based on features, tools, customization options and value.
E*Trade
ETrade is a popular platform for options trading that provides a user-friendly experience for traders of all levels. It offers streaming options chains, options analytics and options screening tools to help you identify trading opportunities. You can also analyze the greeks – delta, gamma, theta, vega, and rho – to gain insights into options pricing. ETrade charges $0 commissions for online equity, ETF and options trades.
TD Ameritrade
TD Ameritrade is a robust platform with powerful options tools and resources for advanced options traders. It provides options statistics and probability analysis, options calculators, options screeners, and options idea generation tools. You can analyze options strategies visually using the Strategy Roller and Option Hacker tools. TD Ameritrade has educational resources to help you learn options trading strategies and concepts. Commissions for options trades start at $0.65 per contract.
Charles Schwab
Charles Schwab offers a simple yet comprehensive options trading platform. It provides options tools for analysis, education and trading in an easy-to-use interface. You have access to options chains, greeks, options screeners and options calculators. Charles Schwab has a library of options trading resources and live webinars to help build your knowledge. Options trades at Charles Schwab cost $0.65 per contract.
Interactive Brokers
Interactive Brokers caters to sophisticated options traders with a highly customizable platform and advanced tools. It offers an options portfolio and risk analysis tool, options calculators, options scanners, and streaming options chains. You can automate your options trading strategies using Interactive Brokers’ API and coding interface. Interactive Brokers has competitive commission rates starting at $0.15 per contract. However, the platform has a steep learning curve and is best suited for professional options traders.
OptionsHouse
OptionsHouse is an options-focused trading platform with tools tailored specifically for options trading. It provides streaming options chains, options analytics, options screeners, options calculators and the ability to analyze options strategies visually. OptionsHouse has options trading courses and video tutorials to strengthen your options knowledge and skills. They charge $0 commissions for options trading. OptionsHouse was acquired by ETrade, so its features may be integrated into ETrade’s platform over time.
In summary, while the choice ultimately comes down to individual priorities and needs, the above represent some of the best and most popular options trading platforms currently available based on essential criteria for options traders.
Choosing the Right Options Trading Software for You
Define Your Needs
The first step is to determine your options trading needs and goals. Do you trade frequently or occasionally? Are you interested in advanced options strategies or basic ones? Your needs will help determine how sophisticated a platform you require.
Explore Your Options
There are many options trading platforms to choose from, including brokerage platforms like TD Ameritrade’s thinkorswim, ETrade’s Power ETrade, and Charles Schwab’s StreetSmart Edge. Independent platforms like TradingView, NinjaTrader, and Tradestation are also popular. Compare features like customizable charts, options screeners and strategies tools, educational resources, and commissions to find options that match your needs.
Consider Ease of Use
Look for an intuitive interface with tools that are easy to navigate. Some platforms have steep learning curves that require time to master. If you’re an active trader, an advanced platform with many customization options may be worth the investment. For casual traders, a more straightforward platform may suffice. Test drive platforms by opening a demo account to get a feel for the user experience before committing to a platform.
Check Available Data and Tools
For technical analysis, you’ll want a platform with high-quality market data and charts that can track options prices, implied volatility, and the greeks. Look for tools like options screeners, strategy builders, risk analyzers, and backtesting capabilities. Some platforms provide access to third-party tools and integrated brokerages offer tools for free. Compare available data and tools to find a platform with resources to support your options trading needs.
Consider Costs
Trading platform costs include software licenses, market data fees, brokerage commissions, and any third-party tool subscriptions. Fees can vary significantly between platforms. If low cost is a priority, compare commissions and fees across platforms to find affordable options. Some brokerages provide platform access for free or at a discount when you open an account. Factor any promotional offers into your decision making.
In summary, do your research to find an options trading platform suited to your needs and budget. A platform with the right combination of features, ease of use, available resources, and cost for your options trading goals will serve you well. With so many choices, taking time to compare options will ensure you make the best choice.
FAQs on the Best Options Trading Software
What are the main features I should consider when choosing options trading software?
When evaluating options trading platforms, several key features are important to consider:
- Robust tools for analyzing the options market, identifying trading opportunities, and managing positions. Look for capabilities like options screeners, strategy builders, risk analysis tools, and position management features.
- Advanced order types that give you flexibility and control. The software should support limit orders, market orders, stop-loss orders, and spread orders at a minimum. More advanced platforms will offer additional order types like conditional orders, trailing stops, and bracket orders.
- Access to options data and analytics. The platform should provide options chains, expiration calendars, Greeks, volatility data, and other information to help inform your trading decisions. Some platforms also offer additional options data and education.
- Reliability and security. You’ll want a platform with minimal downtime that protects your personal information and accounts. Check reviews to ensure the software has a proven track record of stability and security.
- Integrated or third-party brokerage services. The best options trading software either includes brokerage services or integrates with major brokerages so you can easily place trades through the platform.
- Cost and fees. Options trading platforms vary significantly in cost. Consider how much you trade and which features are most important to you. Some software is free or low-cost, while more advanced platforms may charge higher fees, especially if brokerage services are included.
What are some of the most popular options trading software platforms?
Some of the most well-known options trading platforms include:
- Thinkorswim by TD Ameritrade – Advanced platform with sophisticated tools, integrated brokerage services. Mostly free to use but brokerage commissions apply.
- tastyworks – Modern platform focused on options trading. Low-cost brokerage with a simple, intuitive interface. Fees are $1 per contract.
- eOption – Full-featured platform with tools for options analysis and trading. Integrates with several major brokers. The platform itself is free to use. Brokerage and exchange fees apply.
- TradeStation – Highly-rated platform for active options and stock traders. Integrated brokerage with commissions starting at $0.50 per contract. Platform and data fees also apply.
- Robinhood – Popular free stock trading app that also supports basic options trading. Very simple interface but lacks many of the advanced tools and features of other platforms. No platform fees but standard options contract and exchange fees apply.
- Option Alpha – Options trading education platform that includes basic tools for analyzing and placing trades. Integrates with several major brokers. Free to use but brokerage and option fees apply.
What are the fees for options trading software and brokerage services?
Fees for options trading
Conclusion
You now have the key information needed to make an informed decision when choosing options trading software platforms. By understanding the strengths and weaknesses of the top options, you can select the one that aligns best with your trading goals, style, and technical needs. With the foundation established here, you are equipped to conduct further research and trials of any platforms that catch your interest. The ideal trading software awaits you. Approach the decision knowing your priorities and conduct thorough evaluations. You will soon have the optimal options trading software to match your trading aspirations.
