Options House Broker Guide for Beginners

As a beginner, you're likely wondering what an options house broker is and how it can help you trade options. An options house broker is a firm that provides a platform for buying and selling options contracts.

Options house brokers offer a range of services, including trading, research, and education. You can choose from various types of accounts, such as cash accounts, margin accounts, and options trading accounts.

To get started, you'll need to open an account with an options house broker. This typically involves providing personal and financial information, as well as setting up a trading platform. Some brokers may have minimum account requirements or maintenance fees.

When selecting an options house broker, consider factors such as fees, commissions, and customer support. Research different brokers to find one that meets your needs and trading style.

Options House Broker has a rich history that dates back to 2001, when it was founded by Thomas Peterffy, a Hungarian-born entrepreneur.

Thomas Peterffy's vision was to create a platform that would allow individual investors to trade options and futures with ease.

The company's early success was fueled by its innovative trading platform, which provided real-time market data and execution speeds that were previously only available to institutional investors.

In 2007, Options House Broker was acquired by E\*TRADE Financial, a leading online brokerage firm, expanding its reach and capabilities.

The acquisition marked a significant milestone in the company's history, enabling it to offer a wider range of products and services to its customers.

Interactive Brokers Inc. was incorporated in 1993 as a U.S. broker-dealer to provide technology developed by Timber Hill for electronic network and trade execution services to customers.

In 1994, Timber Hill Europe began trading at the European Options Exchange, the OM Exchange, and the London International Financial Futures and Options Exchange. Timber Hill Deutschland became a member of the Belgium Futures and Options Exchange, IB became a member of the New York Stock Exchange, and the Timber Hill Group LLC was formed as a holding company of Timber Hill and IB's operations.

The company's expansion continued in 1995 with the incorporation of Timber Hill France S.A., which began making markets at the Marché des Options Négociables de Paris and the Marché à Terme International de France futures exchange. Timber Hill Hong Kong also started market making at the Hong Kong Futures Exchange.

IB created its primary trading platform Trader Workstation in 1995 and executed its first trades for public customers. This marked a significant milestone in the company's history, as it began to provide a more efficient and user-friendly trading experience for its customers.

In 1998, Timber Hill Canada Company was formed, and IB began to clear online trades for retail customers connected directly to Globex to trade S&P 500 futures. This move expanded the company's reach into the Canadian market and provided customers with greater access to global trading opportunities.

The company's growth and innovation continued in 1999 with the introduction of a smart order routing linkage for multiple-listed equity options. IB also began to clear trades for its customer stocks and equity derivatives trades, further enhancing its services and capabilities.

In 2001, OptionsHouse was founded by a group of experienced trading professionals who wanted to create a more efficient and cost-effective way for traders to buy and sell options online.

The company quickly gained popularity among individual traders and small to mid-sized firms due to its robust trading platform and competitive pricing.

OptionsHouse was acquired by E\*TRADE Financial in 2011, which marked a significant milestone in the company's history.

The acquisition brought additional resources and expertise to OptionsHouse, enabling it to expand its services and improve its technology.

Today, OptionsHouse remains a leading online brokerage firm, offering a range of trading tools and services to its clients.

Its platform is still known for its speed and reliability, making it a favorite among active traders and investors.

An options house broker is an intermediary between you and the market, executing trades on your behalf. They play a crucial role in options trading, providing a range of services to enhance your trading experience.

Brokers charge varying fees for options trades, which can significantly impact your profitability. Compare fee structures across different brokers, paying attention to per-contract fees and any additional charges.

A user-friendly platform with robust charting tools, real-time data, and risk management features is crucial for effective options trading. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility.

Some brokers require high minimum account balances or charge inactivity fees. Consider these factors in relation to your trading capital and frequency to avoid unnecessary costs.

To evaluate an options house broker, consider the following key factors:

A user-friendly platform with robust charting tools, real-time data, and risk management features is crucial for effective options trading. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility.

Commission fees can significantly impact your profitability, so compare fee structures across different brokers, paying attention to per-contract fees and any additional charges. Lower fees can improve your overall return over time.

Some brokers charge platform fees and data fees, which can add up quickly. Consider these hidden fees when choosing a broker.

Availability is crucial when choosing a broker. Not all brokers offer options trading, so your first step should be to ensure that the broker you're considering does.

Some brokers may not have the necessary infrastructure to support options trading, which can limit your investment opportunities. Options trading can be a powerful tool for managing risk and maximizing returns, so it's essential to find a broker that offers this service.

If you're interested in options trading, look for a broker that offers this service and has a user-friendly platform to help you navigate the process.

The platform is a crucial aspect of options trading, and it's essential to choose a broker with a user-friendly and stable platform. A good platform should provide real-time market data, charting tools, and risk analysis features.

The range of features offered by the platform is also important. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility. This will enable you to practice and research options trading without any issues.

Some brokers have different approval levels for options trading, which can impact your trading strategies. Ensure the broker offers the level you need and has a straightforward approval process.

The following table highlights some key features to look for in an options trading platform:

Ultimately, the best platform for you will depend on your individual needs and preferences as a trader. Be sure to research and compare different platforms before making a decision.

Good customer service can be invaluable, especially when you’re dealing with complex products like options. Look for brokers that offer prompt and reliable customer support.

Having a broker with a responsive customer service team can make a huge difference in your trading experience. They can help you navigate through any issues or questions you may have.

A broker's customer service should be available when you need it, whether it's through phone, email, or live chat. This ensures you can get help quickly, even during busy trading hours.

Reliable customer support can also help you avoid costly mistakes by providing guidance on complex options products.

Choosing the right options trading platform can be overwhelming, but by considering a few key factors, you can find a broker that fits your needs. Commission fees, for example, can significantly impact your profitability, so compare fee structures across different brokers.

A user-friendly platform with robust charting tools, real-time data, and risk management features is crucial for effective options trading. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility.

Options trading levels are another important consideration. Brokers typically have different approval levels for options trading, determining which strategies you can use. Ensure the broker offers the level you need for your preferred trading strategies and has a straightforward approval process.

Quality educational resources can help you improve your options trading skills and stay informed about market trends. Look for brokers that provide webinars, tutorials, articles, and research tools specifically tailored to options trading.

Fast and reliable order execution is critical in options trading, where prices can change rapidly. Research the broker's execution speed and whether they offer price improvement on orders.

Some brokers require high minimum account balances or charge inactivity fees, so consider these factors in relation to your trading capital and frequency.

Here's a brief comparison of some top brokers for options trading:

Ultimately, the key to successful options trading is not only having the right strategy but also having the right broker by your side to support and guide you along the way.

Interactive Brokers stands out for its smart and easy-to-use tools, making it a great choice for traders of all levels.

Robinhood is another popular option, offering a commission-free app that's perfect for those who want to trade without incurring extra fees.

Ally Invest boasts the lowest fees, which can be a significant advantage for traders who plan to execute a high volume of trades.

The "Thinkorswim" platform from TD Ameritrade is ideal for rookie traders, providing a user-friendly interface and robust charting tools.

E*TRADE excels in research tools and spreading options, making it a great choice for traders who want to stay informed and make informed decisions.

Charles Schwab offers a comprehensive suite of tools with full-service options, catering to traders who need a more hands-on approach.

Tastytrade is a great option for specialized options trading, providing a platform that's specifically designed for this type of trading.

TradeStation is another top choice for expert traders, offering a powerful platform that's ideal for those who want to execute complex trades.

Here's a summary of the key advantages of each broker:

Broker fees and commissions are a crucial aspect to consider when choosing an options trading platform. Brokers often charge per-contract fees for options trades, so it's essential to understand the cost structure.

Lower fees can significantly improve your overall return over time. Compare fee structures across different brokers, paying attention to per-contract fees and any additional charges.

Some brokers require high minimum account balances or charge inactivity fees, so consider these factors in relation to your trading capital and frequency to avoid unnecessary costs.

Here's a brief rundown of some popular brokers and their minimum account requirements:

Commission fees, platform fees, or data fees are all types of fees you might pay when trading options. Commissions are something people take into account when choosing the best options trading platform, but they aren't as important as other factors.

You can always call your broker and see if they'll lower their commission fees. Some brokers, like Thinkorswim, are usually great about that.

Interactive Brokers offers the best smart and easy-to-use tools, making it a great option for traders who value simplicity and effectiveness.

A user-friendly platform with robust charting tools, real-time data, and risk management features is crucial for effective options trading. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility.

Tastyworks' platform is geared specifically towards options traders, allowing you to analyze your risk profile if you have multiple positions on a specific underlying.

Here are some key features to consider when choosing an options trading platform:

TradeStation offers a comprehensive platform with an impressive range of investable assets, making it a great option for advanced traders who need a wide range of analysis tools.

Tastyworks offers endless hours of trading videos, shows, and up-to-the-minute trade ideas, providing excellent educational support for traders.

The best trading platform for rookie traders is TD Ameritrade's "Thinkorswim" Platform, according to the key advantages of the reviewed brokers.

Interactive Brokers stands out for its best smart and easy-to-use tools, making it a great option for traders who value simplicity.

Tastyworks doesn't charge for the use of their software or access to data, which is a huge bonus for traders who want to save money.

Charles Schwab offers the best tools with full-service options, making it a great choice for traders who need a lot of support.

The commission fees for options trades can be higher and more complicated than stock trading, with some brokers charging $1.00 to open options trades.

Investors with bigger portfolios may be able to use portfolio margin to minimize the risk of a margin call by offsetting netting gains in one option trade with losses in another.

Here are some of the key features of Tastyworks:

Tastyworks' analysis page is a game-changer for option traders. Their platform is geared specifically towards options traders, allowing you to analyze your risk profile if you have multiple positions on a specific underlying.

With Tastyworks, you can analyze all the different risk profiles of a combined position, giving you a clear picture of your potential gains and losses. This feature is especially useful when you have multiple positions on the same underlying, like an iron condor and a butterfly spread.

TradeStation also offers impressive analysis tools for advanced traders. Their platform provides high-quality tools for research and education, helping users make informed decisions and stay updated on market trends.

Tastyworks' analysis page is remarkable, allowing you to see how a possible adjusting position will change that trade outlook. Any option trader will greatly appreciate the platform's spectacular attention to detail.

Here are some key features to look for in an analysis page:

Our real-time stock alerts service is a great option for those who want to trade stocks instead of options. We provide simple and easy-to-follow alerts that include entries and exits.

You can choose to trade stocks with our service, which gives you the flexibility to decide what works best for you. Our stock alerts are designed to be easy to implement.

We also offer free options courses that teach you how to implement our trades. These courses are a valuable resource for anyone looking to improve their trading skills.

Choosing the right options trading broker can be a daunting task, but it's essential to consider the broker's suitability for your needs and trading style.

If you don't trade options, you'll find better value elsewhere, as Tastyworks fees are still competitive for futures and equities. Some brokers like Questrade or E*Trade might be a better fit for you.

A user-friendly platform with robust charting tools, real-time data, and risk management features is crucial for effective options trading. Look for platforms that offer paper trading, options strategy builders, and mobile accessibility.

Ensure the broker offers the level of options trading you need for your preferred strategies and has a straightforward approval process. Some brokers may have limitations on certain indices, ETFs, or international markets.

To avoid unnecessary costs, consider the broker's account minimums and fees, including inactivity fees. This will help you avoid draining your trading capital.

Here are some key factors to consider when evaluating a broker's suitability:

In addition to these factors, consider the broker's execution speed and quality, customer support, and educational resources. A responsive and knowledgeable customer support team can be invaluable when dealing with complex options trades or technical issues.