eToro is a world-leading “social investing” platform dedicated to retail investors and professional traders alike. It offers trading possibilities for currencies, commodities, cryptos, stocks, ETFs, and indices. However, day traders tend to look for one key ingredient: options.
This article will dive into whether or not you can trade options on eToro, if the platform has plans to include them, and what the best alternatives are for 2022.
Can you trade options on eToro?
The short answer: Yes, you can trade options on eToro, but only if you are from the United States.
Non-US investors cannot trade options at eToro. Further, no indications exist that eToro will provide options trading outside the United States soon.
As a social investing platform, it promotes copy trading instead of options trading. This is where inexperienced traders copy the trades done by more popular or professional traders.
It works well for both serious learners and more casual investors. You can learn the craft from popular individuals active on eToro or trust them to indirectly manage your portfolio since the copying is automatic.
However, eToro operates through a mix of only stocks, ETFs, and derivatives known as CFDs. CFD stands for “Contract for Difference.” It’s a highly speculative derivative representing a contract between you and your online broker, who agrees to pay you any profits between a starting and a closing price. The opposite is also true. Approximately 79% of retail investor accounts lose money trading CFDs with eToro.
So if genuine options trading is your goal and you’re not from the US, you’ll need to look elsewhere. We’ll cover the current best alternatives in the next section.
Best Options Trading Platforms Worldwide
Options brokers are what you came looking for, so here are our top picks:
Founded in 1978, IBKR is one of the world’s most trustworthy brokers worldwide. The minimum commission for US options is just $1 per trade. You have access to options trading in North America, Europe and the Asia Pacific.
💡 Interactive Brokers also launched IBKR GlobalTrader, a modern mobile trading app to trade Stocks, Options and ETFs, ideal for novice investors.
An online broker that offers stocks, ETFs, bonds, futures, and options on major American, Asian and European exchanges and provides IPO access for individual investors. The commission for US Stock options is $0.65 per contract. Other options contracts cost $1.50 per trade.
A low-cost European based broker with over 2.5 million users. It offers options in the European and US markets with a starting commission of $/€/£0.75 plus connectivity of €/£5 per month, independently of the number of transactions.
A US-based broker offering commission-free US options trading (only) to all its users worldwide. For European investors, an outgoing wire transfer costs $25.
Formerly known as Tastyworks, tastytrade is a brokerage firm dedicated to stocks, ETFs, cryptocurrencies, futures, and options trading. The option pricing starts at $1 to open a contract with a $10 cap per trade ($0 to close a contract).
A broker offering a wide range of products, including US options from $0.60 per contract.
1# Interactive Brokers
IB at a glance
Founded in 1978 and publicly listed in NASDAQ (ticker: IBKR), Interactive Brokers is a global online broker which surpassed significant financial crises, showing resilience and a rigorous risk management process.
Interactive Brokers provides several different options for traders to choose from. The platform is designed for individuals and institutions alike, boasting global access to stocks, options, futures, currencies, bonds, and funds from 150+ markets. Interactive Brokers makes them all accessible from one streamlined and centralized platform.
Options Trading is offered on 30+ market centres with commissions starting from $1 for US option contracts. The trading platform presents advanced options trading tools such as Rollover Options Tool, OptionTrader and Option Analytics. You can view your positions, market data, option chains and customize your trading strategies using a Strategy Builder. The Interactive Brokers Traders’ Academy might be excellent for deepening your knowledge of options!
As an aside, Interactive Brokers owns IBKR Global Trader, a mobile app geared toward newcomers to the investment industry that allows stock, options, and ETF trading. This product offers automatic currency conversions, fractional shares, and a demo version.
Want to know more about Interactive Brokers? Check our Interactive Brokers Review.
Investing involves risk of loss.
Freedom24 at a glance
Founded in 2008, Freedom Finance, the official company name of Freedom24, has already offered to its 400,000+ worldwide clients participation in 280+ IPOs, including 40,000+ trade stocks, 1,500+ ETFs, 1,000+ US Stock Options and 147,000+ bonds on the largest exchanges in Europe, Asia and the US.
Freedom24 trading platform can be accessed through PC and mobile App versions. Both trading platforms are adequate for executing trades. They are well designed and intuitive but lack customization options. You are provided with additional features such as “InvestIdeas” and “News”.
Freedom24 offers options in several markets and currencies. US stock options have a commission per trade of $0.65. Other options contract cost $1.50 per contract. Besides, if you decide to exercise your options positions, you will be charged $1.50 per contract.
As a plus, Freedom24 offers IPO access to hundreds of companies awaiting their opportunity to trade on major stock exchanges (explore the upcoming IPOs!). There is excitement around this feature since it was only available for institutional investors.
Want to know more about Freedom24? Check our Freedom24 Review.
Investing involves risk of loss.
DEGIRO at a glance
Founded in 2013, DEGIRO is a low-cost brokerage firm that has become very popular due to its low rates! With over 2.5 million users, the innovative platform has become widely known for its “do-it-yourself” philosophy. You have everything at your disposal to start investing on your own. It offers a wide range of financial assets to trade, including stocks, ETFs, bonds, options, futures contracts, warrants, investment funds, and some leveraged products.
DEGIRO allows you to trade options in the US (CBOE, CME, NYMEX…) and European markets (Eurex, Euronext exchanges, IDEM…). The commissions to do so are pretty high. You will pay $/€/£0.75 per contract in addition to a monthly connectivity fee of €/£5. Besides, you will be charged €/£1 per contract when exercising an option.
The trading platform is not sophisticated for options trading, meaning no advanced tools to see the complete picture of the dynamics affecting options pricing. In other words, the platform is only suitable for execution (buy or sell).
Still any doubts? Go through our DEGIRO Review!
Firstrade at a glance
Founded in 1985 and based in the US, Firstrade is a discount broker that offers commission-free stock, ETFs, options, and mutual funds trading with solid order execution, a long track record and a good reputation.
While they accept clients from worldwide, their product portfolio includes only US-listed financial products. Also, Firstrade misses some highly-valued features for investors: fractional shares trading and other asset classes such as cryptocurrencies, forex, futures, and CFDs.
Options trading in Firstrade is relatively cheap: $0 commission and $0 contract fee with no exchange, exercise or assignment fees. The trading platform for options is at a mid/advanced level with access to options chains, a risk/reward profile for each trade and a fully integrated OptionsPlay. Besides, you can educate yourself with free options courses on the platform.
tastytrade at a glance
Tastytrade is an online brokerage firm based in the US focused on options trading, but it also provides access to stocks, ETFs and cryptos. The robust trading platform was developed by the same people who built the thinkorswim trading platform (operated by TD Ameritrade).
Tastytrade offers options on stocks and ETFs, futures and micro futures for a commission of $1 ($10 cap), $2.50 and $1.50 per contract, respectively. No commission is charged to close any options position.
On the downside, the low fees don’t make up for the limited account amenities and lack of investment selections for the casual trader or passive investor – no mutual funds, for instance. Additionally, the wire transfers commission can reach $75 per transfer.
Although tastytrade can be intimidating for beginners, It offers a wide range of educational materials and research tools to increase your efficiency in options trading.
Tradestation at a glance
Founded in 1982, TradeStation is a US broker committed to offering you the best trading experience within their rewarded platforms and brokerage services. You can trade stocks, ETFs, options, futures and crypto with competitive pricing models.
The price per contract starts at $0.60 with access to real-time data for stock options. The platform has been developed with powerful and intuitive tools that match the needs of both beginner and advanced investors. The in-house software, OptionStation Pro, lets you quickly build options chains, analyze any options strategy scenario, and then promptly place trades directly into the market.
What makes a great online broker for options trading?
While it boils down to your personal preferences and anticipated trading activity, there are seven essential items to check with your next online broker:
- Contract fees. What is the per-contact charge for opening or closing an options position? Ideally, this should be less than $1.00, and closer to $0.50.
- Account fees. Sometimes referred to as custody or management fees, these should be nil or close to nil. If there are such fees, then it’s fair to expect lower per-contract charges or other perks, such as broker-made options trading guides.
- Minimum deposits. Thanks to the incredibly diverse array of online brokers available today, you should expect minimum deposits to be as low as $1.00.
- Regulators. The more regulators, particularly in the USA and Europe, the better. At a minimum, you should look for oversight and broker default protection, such as the £85,000 afforded by the FCA and the €20,000 by CySEC.
- Trading tools. With options trading, tools such as technical charts, market analyzers (particularly with sentiment), and options strategy builders are essential. Your online broker should provide an intuitive interface, whether desktop- or mobile-based, for reading the markets and crafting options strategies.
- Learning resources. Are there video guides or commentaries from proven traders?
- Access to additional derivatives and global markets. Does the platform provide access to options following currencies? What about futures? Is it restricted to US stock options only?
The bottom line
To sum it up, these are our top picks:
Best Online Brokers for Options Worldwide
|#1||Interactive Brokers||International full-service broker|
|#2||Freedom24||International discount broker (execution-only)|
|#3||DEGIRO||European discount broker (execution-only)|
|#4||Firstrade||US discount broker|
|#5||Tastytrade||US discount broker|
For investing or day trading using stocks or ETFs, eToro remains a solid choice. Its 0% commissions on stock trading, zero account fees, and status as a world-leading social investing platform have attracted over 25 million registered users.
However, options trading on eToro is woefully nonexistent, and most CFD traders lose money. We’ve done the homework for you in this article and scanned the best alternatives for options trading in 2022.
Did we answer all of your questions? If not, please let us know your feedback in the comments below!
eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorised and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
How good is eToro as a brokerage?
Please check out our in-depth analysis on eToro here.
Are CFDs the same as options?
No, CFDs are “contracts for differences” and represent agreements between clients and brokers on the payment of performances between initial and final levels of assets. It’s described simply as a form of speculating.
No options ownership occurs. Options confer rights or obligations upon their traders to possibly obtain underlying assets.
Is eToro safe?
Yes, eToro is fully regulated and supervised by top tier regulators, including the Financial Conduct Authority (FCA) in the UK and the Australian Securities and Investments Commission (ASIC) in Australia.
The subsidiary in Europe is regulated by the Cyprus Securities Exchange Commission (CySEC), and the subsidiary in the USA is regulated by the SEC and is a member of the Financial Industry Regulatory Authority (FINRA).
Can you use eToro in Europe?
Yes! eToro is available to residents of the European Union and the UK.