The boom of online brokers of the past decade has given retail traders access to financial tools and instruments previously reserved for professionals. Among the most popular products investors can now trade in are options.
Options trading is a popular strategy traders can use to take advantage of different market conditions. One key difference between regular stocks and options is that stocks give you a share of ownership in a company. In contrast, options are derivatives that give you the right to buy or sell the actual stock at a specific price by a particular date.
Options trading may seem confusing at first, but it’s easier to wrap your head around once you understand the basics. Options contracts provide leverage, which allows you to control more stock for the same amount of money. For the knowledgeable options trader, options can be used to profit from a range of market outcomes, potentially with limited risk.
Best options brokers in Europe
Options are very popular among US retail traders, but European investors can now access them on equal footing. Here is the list of international brokers that currently allow European clients to trade US (American) options, European options, or vanilla options:
- Interactive Brokers: My recommendation
- Avatrade: Great for forex options and mobile trading*
- DEGIRO: Good for European-style options
- Firstrade: Good alternative to IBKR
- Tastyworks: Another alternative to IBKR but only fundable with CurrencyFair (get 10 free transfers with this link)
Most brokers require that you complete an appropriateness test before they allow you to buy/sell puts and calls. I recommend you do a lot of reading and spend some months with a demo account before walking headlong into this trendy endeavor.
Best for: Long-term investors, most investment products
Your capital is at risk. Investments can fall and rise and you may get back less than you invested.
Best for: Beginners and passive investors
Investing involves risk of loss.
Recommended for: Investor protection & zero-commission options
Brokers I don’t recommend
- Saxo Bank: Very expensive
- Swissquote: Very expensive
Saxo and Swissquote are, in my opinion, uncompetitive legacy brokers that are out of sync with the current market. Both brokers are expensive to trade with for both stocks and options.
*Avatrade risk warning: 76% of retail investor accounts lose money when trading CFDs with this provider.