Options trading is one of the last conundrums in the trading world where investors still have to fork over cash for fees. Major online brokers do not charge commissions for trading stocks or ETFs, and many offer mutual funds with no transaction fees. However, although some emerging brokers are now waiving option fees, options still typically cost about $0.65 per contract.
Here we will introduce brokers that currently offer commission-free option trading and their points of caution.
Commission-free trading of options: What to look out for
For many brokerages, options trading remains the only holdout as securities remain expensive to trade. Even among the best brokers for options trading, many still charge trading fees. Also, don't be fooled by claims that a broker collects a fee per contract while claiming not to charge a commission. The following brokers do not actually receive commissions from traders.
However, not everything is 100% cost-free. That's because some brokers still pass on the small options regulation fees they charge. His fees are less than 3 cents per contract. All brokers charge a commission, but some do not pass that cost on to their customers.
While cost may be your only concern when choosing a broker, it is important to consider the other features the broker offers. Many brokers offer research and education that can add great value, and strong customer support helps both beginners and experienced investors. These additional features may be especially valuable for occasional options traders, but other traders may find that low cost is the most important criterion anyway and go with the cheapest broker. I don't know.
Brokers offering free options trading
first raid
Firstrade offers a powerful feature package that complements free trading of options, stocks, and ETFs. These features include more extensive research than what the broker offers in this article, such as access to Morningstar reports and an education section. Firstrade is a relatively new player in fractional stock trading, having launched in December 2023, and allows customers to start with as little as $5, making it attractive to new investors.
Moo moo
Moomoo has recently made strides to bring its pricing more in line with the market, including lowering option fees to zero. There are no commissions for trading stocks or ETFs, a distinct advantage for investors looking to trade Hong Kong stocks or China A shares, which are rare at U.S. brokerages. And then we get the Nasdaq Level II data. Moomoo offers the best rates on margin accounts and cash balances, although there are no fractional shares.
public.com
Public is one of the new entrants to the securities industry, but it is aggressively expanding its product offering, from stocks and ETFs to cryptocurrencies and options. In fact, Public rebates a portion of its profits on options trades, so it can be advantageous even after regulatory fees are taken into account. The broker offers a social feed where you can chat about stocks, the ability to trade fractional shares from as little as $1, and a robust education section. If you want more research, Public offers a $10 monthly subscription that includes Morningstar research and upgraded support.
robin hood
Robinhood was one of the earliest brokers to gain traction in the world of commission-free trading, and the added feature of commission-free options trading is a definite benefit of working with one of the best investing apps. If you want to trade from your mobile device, Robinhood is the way to go. Its easy-to-use interface allows you to conduct transactions quickly. You can also trade cryptocurrencies directly within the app, and Robinhood offers an attractive matching bonus program for your IRA.
SoFi Active Investing
SoFi has an attractive proposition with active investing services that allow customers to trade stocks, ETFs, and options commission-free. This is a great add-on if you are already a SoFi client and want to continue your financial business with one provider so you can see everything in one account. You can trade fractional shares from as little as $5, which is a nice feature for beginners, but the broker doesn't offer mutual funds and has limited research for its customers.
Webull
Webull is an easy-to-use mobile investing app that allows for regular commission-free trading of stocks and ETFs as well as commission-free trading. Webull has beautiful charting features and the ability to trade fractional shares, allowing anyone to invest for as little as $5, even in high-priced stocks. This broker offers instant funding and allows you to trade cryptocurrencies without commission, but you will pay a built-in spread markup.
