When it comes to trading options, things can get a little expensive — especially if you are an active trader. As a result, it makes sense to minimize the fees you pay.
Options brokers often charge a transaction fee for each trade, plus a contract rate for each individual contract that is part of the trade. Before you sign up with an options broker, make sure you understand the fee structure, as well as how options are traded.
Do the math, and decide which options broker makes the most sense for your situation. Here are some of the lowest priced options brokers:
Use optionsXpress if you don’t want to worry about a base commission. There is a flat rate of $12.95 for the first 10 contracts — as long as you are considered an active trader (it’s a $14.95 flat rate, standard). However, if you trade 10+ contracts, you pay $1.25 per contract as an active trader, or $1.50 per contract for the standard rate. Depending on how many options you trade, you might actually be ahead to pay the flat rate required by other options brokers in exchange for much lower per-contract rates.
Another low cost option is TradeKing. This low cost broker often receives good reviews for customer service, as well as for the low cost options commissions. Stock options are fairly straightforward. You pay $4.95 per trade, plus $0.65 per contract. There are no minimums in terms of deposits to get started. However, you do need to meet minimal requirements to avoid an annual fee of $50. As long as you keep at least $2,500 in your account, and complete at least one commissioned-charged trade every 12 months.
One of the main players in options trading is OptionsHouse. OptionsHouse offers the lowest options trades out there. Options traders can choose from two plans when it comes to how they are charged:
- Your first five contracts are $5. After that, you pay $1 for each additional contract. This is a reasonable option for someone who doesn’t trade a lot of contracts.
- The other option is that you pay a fee of $8.50 + $0.15 per contract. If you are trading more than 10 contracts at once, this can be a great deal.
OptionsHouse is straightforward. You don’t need a minimum balance, and there is no minimum trading threshold to receive the low options commissions.
The structure at tradeMONSTER is a little more involved, but it is still fairly straightforward, and features a fairly low cost. With tradeMONSTER, you pay $7.50 per trade, and the per-contract rate depends on how many contracts you trade each month:
- Between 1 and 10,000 contracts per month: $0.50 per contract, with a $12.50 minimum.
- Between 10,001 and 50,000 contracts per month: $0.40 per contract, with a $3.50 minimum
- Between 50,001 and 100,000 contracts per month: $0.20 per contract, with a $3.50 minimum
- More than 100,000 contracts per month: $0.10 per contract, with a $3.50 minimum
As you can see, if you trade more than 100,000 contracts per month, tradeMONSTER can be a better deal than OptionsHouse. Futures contracts, and options on futures, trade on a per contract, per side basis, and cost $1.50 each. You do need $2,000 in order to open a cash account with tradeMONSTER.