The boom of online brokers of the past decade has given retail traders access to financial tools and instruments that were previously reserved for professionals. Among the most popular products investors can now trade in is 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, while options are derivatives that give you the right to buy or sell the real stock at a specific price by a specific 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 knowledgably option trader, options can be used to profit from a variety of range of market outcomes, potentially with limited risk.
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)
- Saxo Bank: Very expensive
- Swissquote: Very expensive
Most brokers require that you complete some sort of appropriateness test before they will 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 endeavour.