A user has asked: I’m looking for somewhere that offers trading options on the US markets?
Answer: You will need a broker that offers options trading to UK residents. Options trading is much more common in America than it is in the UK and as such there is much more options liquidity on US markets for private investors.
Why is options trading so popular in the US?
Primarily this is because derivatives products like CFDs and spread betting are not allowed in America. It is possible to trade futures, single stock futures are not as common as futures on indices and commodities. So if our American friends want to trade stocks with leverage they tend to do it through options.
Options may seem complicated at first, but actually they are a very useful tool for getting a lot of exposure with a little money. They are also a form of limited risk investing if you are buying options are your risk is limited to how much you pay for the options. On the flip side, if you start selling options, your losses are potentially unlimited.
If you’re new to options trading here’s how to trade options so you can understand the process, benefits, features and pitfalls before you begin.
Finding a broker that offers US options trading
If you are based in America you need options broker based in the US. The American regulators are very particular about where their citizens and residents can trade and UK brokers are not allowed to onboard US clients.
If you are outside America, a London based broker can offer access to options trading on the US markets. Most can provide options as a CFD or spread bet, but DMA brokers are your best option as you can buy and sell on exchange options with direct market access.
Richard founded the Good Money Guide (previously Good Broker Guide) in 2015 and has been a broker for 20 years most recently at Investors Intelligence and previously a multi-asset derivatives broker at MF Global (Man Financial). Richard started his career working as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson) after interning on the NYMEX oil trading floor in New York and London IPE in 2001 & 2000.