Choosing an Option Trading Platform

An option trading platform is an online broker that supports options and allows you to trade them. The platforms provide a wide range of options-related tools, including an option chain, order types, and charting features. Options are leveraged bets that allow traders to speculate on the future price of a security by paying a premium for the right to buy or sell shares at a specified price before the contract expires. If they exercise the options before expiration, they make a profit; if not, they lose money.

When choosing an options trading platform, consider your level of experience and investment objectives. You will need to be approved for margin privileges before you can start trading options; this typically requires providing your brokerage with information about your annual income, employment details, and net worth. You may also be asked to answer questions designed to assess your ability to understand and manage the risk involved with options trading.

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Some brokers focus on options trading, while others offer it as an add-on to their core offerings. E*TRADE, for example, is one of the most popular options trading platforms thanks to its high-powered desktop and mobile trading apps, $0 commissions on stocks and ETFs (with additional fees applied per trade), $0 account minimums, a wide range of investment choices, and educational resources. TD Ameritrade is another great choice, offering options on its mature platform at $0.65 per contract and no minimum deposit requirement.