Options trading is increasingly popular. Because trading options is riskier and requires more knowledge than trading stocks, investors are usually pickier regarding the specific trading platform used. Hence, we have compiled the best options trading platforms in the UK.
It offers a vast selection of financial products, including Options traded in the US (Chicago Board Options Exchange – CBOE)), Canadian (Montreal Stock Exchange) and European Markets (Eurex Exchange).
Saxo Bank features a beautiful platform with in-depth research offered. You can access options from 20 exchanges worldwide.
An option gives the owner the right, but not the obligation, to buy or sell an underlying asset, such as a stock, at a given price (strike price) until a maturity date. Amid restrictive monetary policies and, thus, less favourable market conditions, traders usually resort to options to increase profits or hedge their positions.
If you want to know how trading options in the UK work, you’ve come to the right place. First, we will dive into the key factors that come into play when choosing an options platform. Then, we will review our top choices and let you know which are the best options trading platforms in the UK in 2022. Keep in mind that famous options brokers such as TD Ameritrade, Robinhood, Etrade and Webull are unavailable in the UK. Thus, they are not on this list.
How to choose a platform for options trading?
Educational Resources: Options trading tends to be more difficult than your regular stock trading. Consequently, you benefit by having an investment platform that offers comprehensive educational resources, such as articles, videos, courses, etc. This is especially important for beginners.
Fees: Options fees tend to be more intricate than stock fees. However, since the 2019 commission cuts, brokers have been more cautious about charging fees to traders. Mindful of this, we have selected two brokers that offer some of the most transparent costs and have excellent reputations!
Trading Platform: At the end of the day, this is one of the most important parts of trading. You should have easy access to information, a friendly user interface and a beautiful design. Everything should be crystal clear and allow for fast actions because you know the market doesn’t wait.
Best Options Trading Platform in the UK
You’re here because you want to know the ins and outs of trading options in the UK, so here are our top choices for the best options trading platform in the UK.
1. Interactive Brokers
Products: Stocks, Bonds, Mutual funds, ETFs, Options, Fractional shares, Futures, Forex, Commodities
Regulatory entities: FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB
Minimum Deposit UK: £0
Demo Account? Yes (£1,000,000)
Options Fees: Fixed: £1.70 per contract; Tiered: £0.60 per contract for index options and £1.00 per contract for stock options
Pros
✔️ Extensive product selection
✔️ Richness and depth of data
✔️ Remarkable research
✔️ Low fees
Cons
❌ The platform can be challenging to navigate for beginners
❌ Only accept deposits by bank transfer
Interactive Brokers is best for
- Mainly intermediate and advanced traders, but with IBKR GlobalTrader is also becomes easier for beginners.
Interactive Brokers Platform and Educational resources
Interactive Brokers has one of the most powerful platforms out there. The vastness of products, the quality of the educational resources and the complexity of the data you can access are just outstanding. This one is a no-brainer, and IB is always an option when trading options (pun intended).
Interactive Brokers Commissions and Fees
Although the fee structure can be a little bit difficult to comprehend, this broker offers a vast array of products with very low fees. There are no account fees and no added spreads or account minimums. In terms of options, you can find all the information here, but here’s a brief example from their website:
Interactive Brokers – Last Words
Interactive Brokers is one of the best brokers that operate in the UK. Besides having a robust platform, educational resources and low fees, it is very safe, as it is regulated by the UK’s Financial Conduct Authority (FCA). They also offer phone, chat, and email support if you have any questions. This one is a great choice!
2. Saxo Bank
Products: Stocks, ETFs, CFDs, Options, Futures, Forex, Bonds and Funds
Regulatory entities: FSA, FCA, MAS, FINMA, ACPR, AMF, DNB, FSMA, NBB, SFC, ASIC
Minimum Deposit UK: £0
Demo Account? Yes (£1,000,000)
Options Fees: Starting at £1 for stock options and contract options
Pros
✔️ Award-winning platform
✔️ Excellent track record, operating in multiple countries
✔️ Highly regulated
✔️ Vast product portfolio
✔️ Has a proprietary research team
Cons
Higher fees charged
Saxo Bank is best for
- Research-oriented investors and traders
Saxo Bank Platform and Educational Resources
This Danish brokerage firm offers a robust platform. Regulated by the FCA and with an excellent tracking record, you get top-quality research and an extensive product portfolio with Saxo Bank. Regarding educational resources, Saxo Bank goes the extra mile with a proprietary research team that offers premium content.
Saxo Bank Commissions and Fees
The commissions and fees could be more generous. You don’t pay fund, withdrawal and forex fees, but you do pay inactivity and custody fees. In addition, the fees on options and futures are above the market average. Here are some of the prices that you can find here:
Saxo Bank – Last Words
Saxo Bank is a well-established player in this market. Founded in Denmark in 1992, this broker offers a terrific track record and is regulated by top-tier financial regulators. It features an extensive product portfolio and educational resources. We just wish the fees were a little lower. Nonetheless, it is still one of the best options trading platforms in the UK!
The Bottom Line
Trading options is an ever-growing choice for traders. The restrictive monetary policy, crypto market crash, rising inflation, and the overall not-so-favourable state of the significant economies make options an excellent alternative to raising profits. However, and as always, higher profits always mean higher risks, so you should trade options carefully.
We have presented our choices for the best options trading platform in the UK. We hope this has helped you increase your understanding of UK options brokers. Still, it shouldn’t be regarded as investment advice. You should seek out and gather all possible information before making any trade. If possible, always start with a demo account!
Happy investing!
FAQs
What is an option?
An option gives the owner the right, but not the obligation, to buy or sell an underlying asset, such as a stock, at a given price. There are two types of options. Call options are contracts that allow the owner to buy a stock at an agreed price within a certain date. Put options are contracts in which the owner can sell a stock at an agreed price within a certain date.
For instance, let’s say that there is a share of company ABC which today is worth £100. If you buy a call option for £50 with the strike of 30, you get to buy that same stock for £100 for the next 30 days. Now imagine that the stock goes up from £100 to £200. If you buy the stock at £100 you have made £50 (£100-£50). The same applies to put options.
Remember, call options are great for when you think the share price is going up, and put options are best for when you think the share price is going down.
Are options considered risky?
Trading options is not the same as trading stock. Not only do you have the underlying asset that can have its own volatility, but you can also trade options, which makes it even more complex. Hence, trading options is riskier than trading stock. As always, we recommend consuming the most information possible before you trade anything to prevent making errors.
Thanks for the article. As an IB user, how does it compare with CMC Markets platform? What’s your opinion.
Best regards
Hello HPATRICIO,
In IB, you can buy options with a minimum commission of $1 in several markets (US, Europe, Asia,…). Whereas, in CMC, you buy what they call “Exchange Traded Options (ETOs)”, which is a synonym for Options (or listed options), for a price of 33$ if the order is below $10,000 or 0.33% above that amount.