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Best Brokers for Options Trading in South Africa (Reviewed)

Conor Scott, CFA| Updated December 6th, 2022
Options Trading South Africa

Best Brokers for Options Trading in South Africa (Reviewed)

The CBOE Volatility Index (VIX) has been elevated recently as interest in options trading grows exponentially following the novel coronavirus pandemic. South Africa in particular is part of this growing global trend. 

There are several choices available. Many articles and guides discuss which options and options brokers are the best in South Africa–in a developing financial services sector where only a handful actually offer direct trading options. They operate through CFDs and indirect exposure. We’ll explain all this in our article. 

In short, we saw the need for a clear guide on options trading in South Africa: to summarize its leading brokers, their merits, and where they fall short. This article delves into our top five picks and why. Let’s get to it.

What Makes a Good Broker for Options Trading in South Africa?

Options brokers in South Africa keep up with the global standards set by the US, the world’s most active financial marketplace. Good brokers have these six virtues in common:

  1. Low account or trading minimums
  2. Competitive and transparent fees
  3. Many product options
  4. Multiple trading and analytic tools
  5. Support for news alerts
  6. Ample learning material

Not every options broker will make our list, but it helps us determine the truly best brokers out there.

The Best Options Brokers in South Africa

Interactive Brokers | Best overall

With a history spanning more than 40 years, IBKR remains one of the most trustworthy brokers available and is unofficially the globe’s default broker, including South Africa. For options, its commissions reach up to USD 0.65 per contract.

Tastyworks | Best for social trading

Tastyworks stands out as an up-and-coming options broker focusing on the retail trader who truly wants to hone their craft. They provide options trading in addition to futures, stocks, indices, ETFs, and cryptocurrencies while keeping to USD 1 per options contract (0 to close).

Tradestation | Best for research

An award-winning and popular options broker in the U.S., Tradestation offers a suite similar to Tastyworks while adding IPOs, mutual funds, and bonds. They offer options at USD 0.60 per contract plus a flat fee of USD 5.

IG | Best for global exposure

IG is one of the world’s most well-known CFD brokers providing indirect exposure to virtually all asset classes, options included. Their commission bid-ask spreads are often commission-free, but they have a higher minimum deposit at ZAR 4,000.

Plus500 | Best for beginner traders

Another CFD broker available to South African residents, Plus500 trims down on their options offering while focusing on user interface and the most popular names in equities, indices, currencies, and commodities. Their spreads are also minimal, alongside a more reasonable minimum deposit at ZAR 1,500.
Disclaimer: 79% of retail CFD accounts lose money.

Options Broker

Direct Options Trading Best for

IBKR

Yes

All

Tastyworks

Yes

Social trading

Tradestation

Yes Research

IG

No, CFDs Global Exposure
Plus500 No, CFDs

Beginners

1# Interactive Brokers

interactive brokers logo
Visit Interactive Brokers

IB at a glance

Annual FeeNone
Minimum DepositNone
Options CommissionUp to USD 0.65 (USA)
ResearchSuperb
RegulatorsFINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, MNB

Publicly listed on the NASDAQ, IBKR continues to show world-leading strength in navigating financial crises, including the novel coronavirus. They earn the trust of options traders and the top spot on our list of the best options brokers in South Africa through their commitment to global access and risk management. 

The platform serves both institutions and individuals, beginners and professionals, by marrying global access to nearly all available asset classes–options included–with an accessible web platform and streamlined mobile apps. In particular, IBKR GlobalTrader leads the industry globally in simplified stock and options, including South Africa. 

They charge a competitive commission rate of up to USD 0.65 per contract for global markets. They also provide zero account opening fees and no minimum activity fees. 

Interested? Read our comprehensive IBKR review.

2# Tastyworks

Best Brokers for Options Trading in South Africa (Reviewed) 1
Visit Tastyworks

Tastyworks at a glance

Annual FeeNone
Minimum DepositNone ($2,000 USD required for margin trading)
Options Commission$1 USD per contract to open (free to close)
ResearchLimited to following traders
RegulatorsSEC, FINRA, ASIC

Based in the US, Tastyworks is a relatively new options trading firm that caters to “do-it-yourself” traders who avoid algorithms or robo-advisors. They offer access to stocks, options, futures, indices, commodities, ETFs, and cryptocurrencies. In fact, their trading platform was built by the same engineers who devised TD Ameritrade’s “thinkorswim.” 

Tastyworks provides a comprehensive trading platform across both desktop and mobile interfaces. However, there is a learning curve wherein beginners should learn the basics of delta, gamma, and so on, before diving into Tastyworks. Once you’re past that, they do allow you to follow leading or popular options traders. 

For stock options, they charge USD 1 per contract for opening a position and nothing to close. They also offer complete transparency by detailing each possible fee. They are competitive but lack the research and educational material of IBKR. 

3# TradeStation

Best Brokers for Options Trading in South Africa (Reviewed) 2
Visit Tradestation

Tradestation at a glance

Annual FeeNone
Minimum DepositNone
Options Commission$5 + $0.60 USD per contract
ResearchSuperb
RegulatorsSEC, FINRA

Similar to IBKR, Tradestation boasts a 40-year history as a US broker focused on providing the optimal trading experience. And they have succeeded, earning titles such as “Broker of the Year 2021” by TradingView and a “Top 5” acknowledgment for options brokers by “Investor’s Business Daily.” 

TradeStation offers a wide range of products, including options, futures, bonds, mutual funds, IPOs, and cryptocurrencies. While they’re good enough to be considered one of South Africa’s best options brokers, we’d have to rank them 3rd on our list due to their high fees. They charge USD 0.60 per option contract plus USD 5 flat per trade. 

They make it up, partially, with OptionStation Pro–an incredible piece of technology for trading options in South Africa with features such as building options chains, analyzing options strategies, and providing instant execution. We suggest TradeStation if you want great research and leading technology, but don’t mind high trading fees.

4# IG

Best Brokers for Options Trading in South Africa (Reviewed) 3
Visit IG

IG at a glance

Annual FeeNone
Minimum DepositZAR 4,000
Options CommissionMinimal Spreads
ResearchGood
RegulatorsFSCA

According to IG, they are the world’s highest grossing CFD (“Contract for Differences”) trader, opening the doors to virtually all asset classes, including options, indices, currencies, commodities, cryptocurrencies, and more. IG Markets South Africa is regulated by the Financial Sector Conduct Authority as an over-the-counter derivative provider. 

Unlike our first three options, IG provides exposure to options trading through CFDs, which are contracts between traders and their brokers for the price differences of assets between when the contracts are opened and closed. This method enables South African options traders to gain exposure to many international markets alongside a choice of daily, weekly, monthly, or quarterly options. 

However, CFDs are complex instruments with a high risk of loss due to leverage. Most retail investor accounts lose money when trading spread bets and CFDs with this provider. We suggest first opening a demo account with IG before committing your assets.

5# Plus500

Best Brokers for Options Trading in South Africa (Reviewed) 4
Visit Plus500
79% of retail CFD accounts lose money.

Plus500 at a glance

Annual FeeNone
Minimum DepositZAR 1,500
Options CommissionMinimal Spreads
ResearchLimited to following others
RegulatorsFCA, ASIC

Similar to IG, Plus500 is a leading CFD broker that provides access to options trading for South African residents. They cover everything from cryptocurrencies to indices to commodities to options. However, their options are seemingly limited to major tech stocks (i.e., Apple, Tesla), country indices, and commodities like natural gas. 

While Plus500 ranks 5th on our list of options brokers in South Africa, we appreciate their focus on education and equipping learners with the tools necessary to succeed. In addition, the element of social trading feels fantastic and gives a sense of “for traders, by traders.”

But again, CFDs carry a high risk of loss from leverage. Most retail investor accounts lose money when trading spread bets and CFDs with this provider. We suggest first opening a demo account with Plus500 before committing your assets.

79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

The bottom line

Options trading is still relatively new but growing in South Africa. Selecting the best options broker as a South African resident is going to be a difficult choice as interest in retail trading continues to expand. We’ve narrowed down the selection to five leading choices based on our criteria.

Each of our recommended options brokers in South Africa excels at certain aspects. Do you care only about exposure and want global access? IG. Do you prefer an established platform known for its reliability and low fees? IBKR. 

Need more recommendations? Check out our platform finder.

Other FAQs

Can you buy options in South Africa? 

While trading options directly in South Africa tends to rely on international brokers, South African residents can buy and sell options. Please review our top five picks above for the leading options brokers in South Africa. 

What is an options broker?

Usually related to “full-service brokers” that try to provide all the necessary tools for an intermediate or professional trader, an options broker is an online intermediary between you and the exchanges that enable the trading of options. The best options brokers, if permitted by law, offer global access to various options or stock exchanges. 

How do you open an options trading account? 

While the process changes per options broker, it remains relatively straightforward. Simply be ready to provide digital copies of official IDs (i.e., passport, driving license, etc.) and a proof of address, and transfer an opening sum through ACH or wire, for example. The options broker, like IBKR, may want to verify your age as well. 

What’s the difference between options and CFDs?

A CFD represents a contract between you and your broker for the potential difference between two prices: the initial entry price at the time of contract initiation and the price prevalent upon the contract’s end. In other words, it’s simply trading the potential profit or loss tied to an underlying asset. 

As a derivative, an option’s performance is also tied to an underlying asset, but options can be exercised in order to purchase or sell the underlying asset at a predetermined price. For example, a call option is bought to lock in the option of purchasing an asset in the future at a certain price.  

What are the risks in buying, trading and selling options?

Since options trading almost always includes the use of margin or borrowed funds, the risks generally are much greater than trading stocks or commodities with only the cash you own. This is referred to as leverage. Again, we recommend completing a basic course in options trading, which are usually provided by options brokers in South Africa.

Conor Scott, CFA
Contributor

Conor is a CFA charterholder who has been active in the wealth management industry since 2012, continuously researching the latest developments affecting portfolio management and cryptocurrency.

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