Best Options Trading Platforms & Options Brokers

If you are looking for a broker to trade options and want to compare options trading brokers in the UK, here are the main things to look out for:

• Types of options offered – does a broker offer DMA and/or OTC options?
• Costs of options trading – how much does it cost to trade options?
• Market access – what stocks, indices, commodities, and currency pairs can you trade?
• Dealer experience – are they capable of helping with strategy creation and execution?

All options brokers regulated by the FCA are listed on the FCA register. We also only include brokers in our options broker comparison table that are regulated by the FCA. Whether a broker is offering OTC or DMA options trading, they need to be regulated by the FCA. Any broker claiming to offer options trading that the FCA does not regulate is breaking the law and may well be a scam.

US traders are not allowed to trade on leverage through products like CFDs of financial spread betting. There is some form of margin trading permitted through margin loans and ETFs. If a US trader wants to increase their leverage on a position, options are one of the only ways to do it. In the UK, margin trading is readily accessible, so options markets are not as liquid and are therefore more expensive.

There are two types of spread when trading options which need to be considered when using an options broker:

• Options spread strategies – this is the name of an options strategy, the most common being straddles, strangles, condors and butterflies. Some of these can be traded online, but the majority need to be traded over the phone with a dealer. The better relationships your dealers have with market makers, the better the price of your spreads will be.
• OTC bid-offer spreads – unlike DMA options trading where you are charged a commission per lot, if you are trading OTC options via a CFD or spread bet, the commission will be built into the premium (also known as the bid-offer spread).

Saxo Markest offers the most types of options trading as you can trade options as a CFD or on-exchange on a huge range of stocks, indices, commodities and forex pairs. However, Saxo Markets does not offer options spread betting. IG, currently offers 50 markets for options trading as a spread bet or CFD.

All options trading except for financial spread betting is subject to capital gains tax. Financial spread betting is unique to the UK and is free of capital gains tax as trades are structured as a bet. However, it is important to speak to an independent financial advisor or tax specialist as tax can be different based on individual circumstances and is subject to change.

US residents are only allowed to trade options with a US-regulated options broker. UK brokers will not open an account for a US resident.

Yes, you can if you call the market right. Options are a tool for investing or trading and there is an opportunity to make a profit and lose money. As with all investing, you can make money trading options if you call the market correctly, but in equal measure, you can lose it. Relative to other forms of investing, options trading should be considered high risk and only suitable for experienced and sophisticated investors.

They offer both, the options contract and exchange are what determine whether an option is classified as American or European. American options can be exercised at any time whereas European options can only be exercised on expiry.

To start trading options you need to have the below:

• An account with an options broker
• Funds to trade with
• An idea of how much risk you want to take
• A full understanding of the risks and rewards of trading options

The first thing you need is a broker that offers access to the type of options you want to trade. You can compare options brokers in our options broker comparison table. All the brokers we feature are regulated by the FCA and offer access to on-exchange and OTC options. It’s important to remember that whilst options trading can be a good way to hedge exposure they can also be a very high risk form of speculation so make sure you fully understand the risks before you start trading options.

The most popular markets for options trading include stock indices and individual stocks, commodities such as gold and oil and trading options over ETFs is becoming more commonplace as well. The volatility seen in the markets during 2020 heightened interest in option trading and strategies and the volumes and values of options trading have picked up significantly because of that. Studies show that traders are increasingly attracted to weekly options and are using these short-term instruments to try and capture the momentum of US markets in particular.

Further reading: These are the most popular markets for online trading.

Yes, you can trade options in the UK. You need an options broker that is regulated by the FCA.

You can trade options through an options broker. Options trade on exchange or OTC for example UK single stock options trade on what was the LIFFE exchange now owned by the ICE or intercontinental exchange. FX Options on the other hand almost exclusively trade off-exchange or OTC. Your choice trading method and venue will be influenced by what you want to achieve with your options trading. Some brokers will offer you the ability to trade on exchange options whilst others will make options process to as either CFD or Spread Betting contracts however these will not be exercisable into the underlying assets the options are over. But if that’s not important to you then you may be better off trading with a margin trading broker who may allow you to trade in fractions of a lot which you couldn’t do on exchange.

Options are considered to be complex products so a retail trader will need to demonstrate their understanding of the risks involved in trading them of course their suitability tests for all derivative trading accounts these days. But live options trading is certainly not for novices or inexperienced investors. Particularly if you are going to be doing anything other than buying puts or calls.