If you’re a millennial who’s looking to get started in the stock market, options trading might be the perfect investment vehicle for you. Options trading can be a great way to generate income and protect your portfolio from downside risk. But with so many different stock option trading platforms available, it can be tough to know which one is right for you.
In this article, we will compare three of the best stock option trading brokerages for millennials and help you decide which one is right for you!
Investing in the stock market can be a great way to build your wealth over time, but it can also be a volatile and risky proposition. For millennials who are just getting started in investing, options trading can be a great way to get your feet wet without having to put too much of your capital at risk.
There are a few things to keep in mind when you’re choosing a stock option trading brokerage. First, make sure that the platform is user-friendly and easy to navigate. There’s nothing worse than getting frustrated with a complicated platform when you’re trying to make a trade. Second, be sure to compare the fees charged by different brokerages. Some brokerages charge higher commissions for options trades, so you’ll want to make sure you’re getting a good deal. Finally, make sure the brokerage offers training, education, and the types of options contracts that you’re interested in trading.
So, what are the best stock option trading brokerages for millennials?
Here are our top three picks:
– Interactive Brokers
– Tastyworks
– TD Ameritrade
Are the platforms user-friendly and easy to navigate?
All three brokerages offer streaming quotes, watchlists, charting, and news.
With Tastyworks, you can customize the platform to fit your trading style. You can also trade from predefined layouts or create your own. The layout is very easy to use and makes trading very simple.
Interactive Brokers offers a customizable platform as well. You can drag and drop the tools you want on the platform and change the colors to fit your preference.
TD Ameritrade has 3 platforms to choose from and they are all very user-friendly. The most popular is the thinkorswim platform, which was designed for active traders.
Overall, all three brokerages offer great tools that are user-friendly and easy to navigate.
What are the commissions and fees?
When it comes to commissions and fees all three platforms are competitive.
Tastyworks pricing is the most competitive as they charge $1 per contract and $0 to close.
Interactive Brokers charges a flat rate of $0.005 per share with a $1 minimum and no commission on closing trades.
TD Ameritrade charges $0.75 per contract with a $3 minimum or you can buy and sell stocks and ETFs for free.
All 3 brokerages are competitive. However, Tastyworks does stand out above the others as the number of trade lots is increased.
The fees do change so be sure and check the websites for the current commissions and fees.
Are the brokerages financially stable?
When it comes to financial stability, Tastyworks is a member of the Securities Investor Protection Corporation (“SIPC”). Therefore, funds are available to meet customer claims up to $500,000, which includes a maximum of $250,000 for cash claims.
Tastyworks is also regulated by Financial Industry Regulatory Authority (FINRA) regulatory bodies.
Regulated brokers are highly unlikely to manipulate market prices due to the regulations imposed. When you send in a withdrawal request to Tastyworks, this will be honored. If TastyWorks violates any regulatory rules its regulated status could be stripped.
Interactive Brokers is also financially stable, FINRA and SIPC insured and regulated. They are a large company with over $10 billion in assets.
TD Ameritrade is also financially stable and insured through SIPC. They are one of the largest online brokerages with over 13 million customers and client assets worth over $1.3 trillion.
Does the brokerage offer training and education?
All three brokerages offer a variety of training and education. Tastyworks has a sister website Tastytrade.com which has live shows all day from before the market opens until after the market closes. Tastytrade has a Learn Center where educational videos are categorized by topic.
Interactive Brokers offers a video content library with interviews, analysis, and features of interest to active traders. They also have an extensive education center with their Traders Academy that goes into great detail on topics related to trading.
TD Ameritrade offers one of the most comprehensive trading academies in the business. They have video courses, articles, webinars, and a practice trading platform.
They all offer the ability to trade options, stocks, ETF’s, and futures. The most common strategies including buying and selling of calls and puts, strangles and vertical spreads are offered across all of the brokerages.
How are the brokerage’s customer service and support?
All three brokerages have excellent customer service and support. They are available by phone, email, or chat.
Interactive Brokers and TD Ameritrade offer 24/7 customer service while Tastyworks is available from 8am-4pm CST.
Unbelievably, the owner Tom Sosnoff is open to emails and always responds right away within 24 hours. I have personally emailed him several times and he has gotten right back to me. As Tastyworks grows I don’t know that he will be able to keep this up.
How much money is required to trade options?
There is no definitive answer to this question, but one can open an account and start trading options with just a few hundred dollars. It is nice to have at least $2000 minimum to be able to make a few different trades. This allows for faster learning and the best way to learn is by making trades.
Options can give you the ability to control a large number of shares for a relatively small amount of money. This is especially helpful if you’re bullish on a stock but don’t want to risk a lot of capital.
Options offer great risk-adjusted returns. This means you can make a lot of money on a small investment, but you are also taking on less risk than if you were to buy the stock outright.
Trading options in a small account can help you to learn how to trade without risking too much money. This is a crucial step if you want to eventually become a successful options trader. The more trades that you get under your belt, the more you will learn.
What are the best option strategies for Millennials and small accounts?
When it comes to trading options in a small account, the key is to find strategies that offer a good risk/reward ratio and will not utilize too much capital in a single trade.
Some strategies are bullish which can be used when your research tells you that a stock is a good value and will likely move up. Other strategies are bearish and used for stocks or ETFs considered overvalued.
Finally, there are neutral strategies that can be used when stocks are not expected to move too much. These strategies aim to profit from the passage of time and/or small price changes.
Defined risk option trades are great strategies for small accounts. The potential loss is known in advance when the trade is placed. Some examples of defined risk option trades include Put spreads, Call spreads, Iron Condors and LEAPS.
There are a variety of options trading strategies that can be used depending on your goals and the market conditions. This Beginner’s Guide To Stock Options covers the basics of how stock options work.
Should Millennials trade options?
Millennials should trade options if they are interested in really digging into the market and learning! Stock options offer a great way to generate income and to protect your portfolio.
Of course, Millennials should always consider investing in their 401K first if employed by a company that offers one. This will be pretax money that is pulled out of their check and invested conservatively for future retirement. This money should continue to accumulate and grow without even laying an eye on it.
However, to be in much closer touch with the market and world economies, it is a great option (no pun intended) for millennials to start trading options. Trading real money and seeing the accounts move up or down forces one to care about the market.
It is much more fun to see an account growing in value rather than losing money. When a trade goes bad, one takes a closer look at the underlying and why it moved up or down. The strategy is also analyzed to find out why it was or was not the correct one to implement. This knowledge can then be directly used in future trades.
How do beginners get started trading options?
Before getting started, it is important to have a firm understanding of the market and what drives stock prices. A few hundred dollars is all that is needed to get started trading options.
There are plenty of helpful resources available for beginners including videos, articles, webinars, and practice trading platforms. The most important thing for beginners is to take their time and not get discouraged.
The three brokerages mentioned in this article (Tastyworks, Interactive Brokers, and TD Ameritrade) are all great choices for beginners. They offer a variety of training and education resources as well as customer service and support.
It is easy to open an account with any of these three brokerages. You simply go to their websites and fill out their application form. There are often free promotions that offer cash, stock, crypto or something of value to get you to start investing with them.
In Conclusion
There you have it! Stock options offer a great way for millennials to get started in the market. When getting started, it is important to trade conservatively with small amounts of money. As you become more comfortable with the market and your trading strategy, you can begin to increase the amount of money you trade.
The three brokerages mentioned in this article are all great choices for beginners. They offer low commissions, a customizable trading platform, and a variety of educational resources.
Tastytrade is the number one choice due to the learn center at Tastytrade.com and live video training daily during market hours. Learning the ins and outs of trading takes some time.
The live trading that one can watch on Trastytrade.com is a huge benefit for millennials new to trading options. The training and feel that you receive from watching is irreplaceable. You can also even duplicate their trades if they seem like a good trade for you!
Interactive Brokers offers more features for experienced traders seeking more tools.
Finally, TD Ameritrade is great for traders who want a more traditional brokerage experience.
So what are you waiting for? Get started trading options today!
*Author’s Note: This is not investment advice. Options involve risk and are not suitable for all investors. Please do your own research before investing.*”