Interactive brokers options volume

Interactive Brokers Review 2017.

Interactive Brokers is a solid choice for active, advanced traders because of its international trade capabilities, low — and volume-based — commissions and quality trading platform. The broker isn’t a good fit for beginners or infrequent traders, as it provides little investor education, requires a high minimum investment and charges inactivity fees that will quickly eat into returns. Such investors may want to check out NerdWallet’s list of best brokers for beginner investors.

NerdWallet's rating: 4.0 / 5.

Quick facts.

Commissions: Fixed-rate and volume-tiered pricing, starting at $1 Account minimum: $10,000 Promotion: Special terms for clients 25 and younger.

Interactive Brokers is best for:

Advanced traders. Day traders. Penny stock traders. Margin accounts. Options trading.

Interactive Brokers at a glance.

• Forex ($10 million in assets required)

Where Interactive Brokers shines.

Low commissions: It’s hard to beat the stock and exchange-traded funds commission structure at Interactive Brokers, which favors frequent, high-volume traders at just $0.005 cent — one-half of 1 cent — per share. There’s a $1 minimum trade commission and a 0.5% maximum, and exchange and regulatory fees are included. The broker also offers tiered pricing to lower rates even more: Investors who trade more than 300,000 shares a month can pay $0.002 cent or less per share, depending on trade volume, although exchange and regulatory fees are extra on this plan.

Options trading, too, is offered at rock-bottom pricing, with just a 70 cent charge per contract and no base (minimum $1 per order), plus discounts for larger volumes.

Trading platform: Interactive Brokers’ Trader Workstation is considered one of the best trading platforms available for advanced traders. The desktop platform is fast and includes standard features like real-time monitoring, alerts, watchlists and a customizable account dashboard. An options strategy lab lets you create and submit both simple and complex multileg options orders and compare up to five options strategies at one time.

Desktop trading platform Trader Workstation.

Other tools include a volatility lab, advanced charting, heat maps of sector and stock symbol performance, paper trading and a mutual fund replicator, which helps users identify ETFs that replicate the performance of a selected mutual fund but offer lower fees. A new feature, InteractiveBroker FYIs, offers customized notifications about events that could affect a trader’s investments. Research, news and market data are also available, although in many cases there’s a premium subscription fee.

Novices will likely find Trader Workstation completely overwhelming, to the point of being unusable. But Interactive Brokers also offers a strong mobile trading app and IB WebTrader, a streamlined browser trading platform that is a bit easier to navigate.

Margin rates: Traders looking to use margin will love the rates that Interactive Brokers offers; they’re extremely low. The maximum margin rate is the benchmark rate plus 1.5%. The broker charges a blended rate based on account balance. It has a calculator on its website to help investors quickly do the math based on their account balance.

Investment selection: Interactive Brokers offers access to a huge selection of products, from standard offerings of stocks, options, ETFs, mutual funds and bonds to precious metals, forex trading and futures. In a change last year, the broker began requiring assets of $10 million or more for leveraged forex positions.

Where Interactive Brokers falls short.

Minimum investment requirement: The $10,000 minimum investment requirement is steeper than at other online brokers, which brings Interactive Brokers’ rating down a notch. The company does lower its minimum to $5,000 for individual retirement accounts and $3,000 for clients 25 or younger, which is a nice offering.

Inactivity fees: Here, too, the minimums are high for all but very frequent traders. Accounts with balances under $100,000 must meet a minimum of $10 a month in trade commissions, or Interactive Brokers will charge the difference as a monthly fee. Accounts with an equity balance of $2,000 or less must meet minimum trade commissions of $20. Again, there is a break here for clients 25 or younger, who have a minimum monthly trade commission of just $3.

Customer experience: Because Interactive Brokers has a variety of commission structures and added fees, it can be hard for investors to quickly identify what their costs will be. The website and trading platforms are clearly geared toward advanced traders, and the customer service is frequently reported to be subpar.

Is Interactive Brokers right for you?

Frequent and advanced traders could see significant commission savings at Interactive Brokers, due to the discounted pricing for high-volume traders. These investors will also benefit from the company’s quality trading platform and fast trade execution.

New investors likely won’t find a home here. The low commissions don’t make up for the high inactivity fees, and the account minimum and lack of educational materials and research are high barriers to entry.

Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. : aosheanerdwallet. Twitter: arioshea.

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Brokerage Reviews: TradeStation Vs. Interactive Brokers.

Comparing Online Brokers: TradeStation vs. Interactive Brokers.

These are among the most sophisticated brokers in the industry in terms of investment offerings, market access and technology. However, these brokers are not for beginner traders – they are for the Big Boys in trading, the sophisticated traders. In this article, we compare TradeStation to Interactive Brokers, based on some key metrics, such as margin rates, pricing and fees, investment product offerings and market access, trading platform technology, market data and research. (For additional reading, refer to Beginner's Guide To Tradestation Trading Software: Getting Started and How To Start Trading: Trading Technology ).

TradeStation Margin Rates.

$1,500,000 - $3, 499,999.

Data Source: Tradestation and Interactivebrokers.

TradeStation’s margin rates are in line with the industry average. Meanwhile, Interactive Brokers’ (IB) margin rates are among the lowest in the industry, and encourage active trading in futures and short selling. IB offers significant value to active traders who can meet the requirements.

Stocks, ETFs and Options: With TradeStation, both equities (stocks and ETFs) and option trades have a similar pricing scheme. Traders have the option to be charged a flat-fee or per-share commission (for equities) and per-contract commission (for options). The per-contract or per-share commission is fixed at $1.00 per option contract or $0.01 per stock or ETF share. Typically, one equity option contract is based on the underlying of 100 shares of stocks or ETF shares, and 100 shares will trade for $1.00, based on the per-share commission. The per-contract price has no base fee and a minimum requirement of one contract that is equivalent to $1.00. Meanwhile, flat-fee commission is tiered, and thus ranges from a base rate of $9.99 plus $0.70 per contract for 1 to 9 trades per month, down to a base rate of $4.99 plus $0.20 per contract for 200 and more trades per month. We note that the base or per-trade rate on the flat-fee pricing structure applies to both option contract and equity (stocks and ETFs) trades. The per-contract commission on flat-fee pricing applies only to option trades. As shown in the table below, the more frequent or active traders trade per month, the lower per-trade commission they pay. Further, for the first 1,000 shares per trade on the per-trade pricing scheme will be direct-routed for free, waiving off the $0.004 direct routing fee. (For additional reading, refer to How can I prevent commissions and fees from eating up my trading profits? ).

TradeStation Option Flat-Fee Commission.

Base Rate or Per Trade Rate.

1 - 9 Trades/month Contracts.

$0.70 per contract.

10 - 29 Trades/month Contracts.

$0.50 per contract.

30 - 99 Trades/month Contracts.

$0.40 per contract.

100 - 199 Trades/month Contracts.

$0.30 per contract.

200+ Trades/month Contracts.

$0.20 per contract.

Data Source: Tradestation.

Unbundled pricing is a third pricing scheme for stocks and ETFs that results in major savings for institutional or volume traders, who can direct their clearing to a particular exchange, and impacts the liquidity of the chosen exchange. According to TradeStation, “Commission based on Unbundled Pricing may result in rates as low as $0.002 per trade”.

Futures Trade Commission.

TradeStation Futures Commission.

1 – 300 Contracts.

301 – 1,000 Contracts.

1,001 – 10,000 Contracts.

10,001 – 20,000 Contracts.

Data Source: Tradestation.

Other fees, such as exchange execution and clearing fees by markets, apply to TradeStation futures trading, depending on the exchange membership level of the trader (e. g. on treasuries, non-members pay $0.65 and proprietary traders pay $0.30) on the CBOT.

Forex currencies: Trade forex currencies on TradeStation commission free because it makes its money on the tight spreads on currency trades. Active traders and institutional clients get even better execution, liquidity and spreads, with spreads as low as 1 pip (e. g. spreads move from 1.6 pip for EUR/USD for retail pricing, down to 1.0 pip for EUR/USD for active trader pricing). RadarScreen is free of charge for forex-only accounts and does not incur $99.95 account service fees.

Bonds and mutual funds: Bonds trade for a base rate of $14.95 per trade plus $5.00 per bond and T-bills trade for a flat rate of $50 per trade. Mutual funds trade for a base rate of $14.95 per trade plus any fund-specific fee that may apply.

TradeStation may charge a monthly account service fee of $99.95 if traders do not maintain a certain minimum trading volume in the preceding month (such as 50 equities and ETF option contracts, 5,000 stocks or ETF shares or 10 round-turn futures or futures options contracts or 50 round-turns of single stock futures) or an account balance of $100,000 at the end of the prior month (except forex-only accounts). The first 10 option contract cancelations are free of charge so long as the total cancelations do not exceed the number of orders for the day on the per-contract commission pricing. The per-share pricing has no cancelation fees.

Interactive Brokers , also referred to as “IB” : IB mainly works with two pricing schemes: fixed commission plan and tiered commission plan. The fixed plan is a flat rate for each transaction (e. g. per trade or per contract) and is inclusive (e. g. VAT, exchange and regulatory fees are included). Not all fees are included in the fixed rate commission, rather some (e. g. transaction fees) are passed along to the trader. The tiered commission plan is a non-inclusive plan whereas exchange, regulatory and clearing fees, as well as VAT are “add-ons,” and is inversely related to the number of contracts or the volume traded (decreasing as the transaction value increases). Savings passed along to the traders include a share of the rebates from the exchanges. (For additional reading, refer to Interactive Brokers: Commission, Fees And Customer Support ).

Clearly, IB targets seasoned, well-funded active traders and trading institutions (such as hedge funds and proprietary trading firms). This is reflected in its high minimum account opening balance requirement (e. g. $10,000 in the US and most other markets, and an equivalent of $5,000 in India) and in its minimum monthly activity requirement of $10 in monthly commission. Failing to meet these requirements results in an activity fee equal to the difference between the $10 minimum and the actual commission attained.

Stocks, ETFs and warrants: In North America, IB’s fixed commission is USD 0.005 per share in the US and CAD 0.01 per share in Canada, with a 1.00 local dollar minimum and a maximum of 0.5% of the trade value; in Mexico, the fixed rate is 0.1% of the trade value, with MXN 60 per share minimum and no maximum. In Europe, the fixed commission is usually 0.1% of the trade value for both euro - and US dollar-denominated investments, with EUR 4.00 per share minimum in a majority of markets (e. g. Austria, Germany, Belgium and France) and varying maximum commissions. Some exceptions apply, where fixed commission in the Nordic countries (Sweden and Norway) is 0.05% of the trade value and in the UK is the base rate of GBP 6.00 for up to GBP 50,000 in trade value, and for a transaction exceeding GBP 50,000, GBP 6.00 base rate applies to the first GBP 50,000 plus 0.05% of the incremental trade value over GBP 50,000. In Asia Pacific (Japan, Australia, Singapore and Hong Kong), the fixed commission is 0.08% of the trade value with varying minimums (e. g. AUD 6.00, NZD 8.00, SGD 2.50, JPY 80.00 and HKD 18.00 for stocks, HKD 10.00 for warrants and structured products, and CNH 15.00 for Shanghai-Hong Kong connected stocks), with no maximum.

Tiered commission, as explained before, drops as the trade value (or shares) increases; unlike the fixed rate, both rebates and fees from the exchanges are passed along to traders. The tiered commission, based on the number of traded shares per month, ranges from USD 0.0035, down to USD 0.0005 in the US, and from CAD 0.008, down to USD 0.003 in Canada, with a maximum commission of 0.5% of the trade value plus applicable clearing and transaction fees. The tiered pricing is illustrated in the table below.

Interactive Brokers Tiered Commission in US and Canada.

Monthly Stock Volume.

US Stocks, ETFs and Warrants.

300,001 – 3,000,000 Shares.

3,000,001 – 20,000,000 Shares.

20,000,001 – 100,000,000 Shares.

Data Source: Interactivebrokers.

In Europe, the tiered commission is based on the currency (EUR, SEK, NOK and GBP) value traded per month (not the number of shares), with the following minimum commissions: EUR 1.25, CHF 1.50 and USD 1.70, and the following maximum commissions: EUR 29.00, CHF 49.00 and USD 39.00 for the respective currency-denominated investments. The UK and Nordic countries (Sweden and Norway) have minimum commissions of GBP 1.00 and SEK/NOK 10.00, and no maximum commissions. The tiered commission structure in Europe is illustrated in the table below.

Interactive Brokers' Tiered Commission in Europe.

Europe EUR, CHF and USD-Denominated Investments.

UK GBP-Denominated Investments.

Nordic Countries NOK and SEK - Denominated Investments.

Value (EUR) traded per month.

Value (GBP) traded per month.

Value (NOK & SEK) traded per month.

Data Source: Interactivebrokers.

Options: In the US, all "direct routed" option orders trade at a fixed commission of USD 1.00 per contract and “smart routed” option orders are charged a tiered commission, based on the number of contracts per month and their option premiums, whereas in Canada, all options trade (only) at the flat or fixed commission of CAD 1.50 per contract. The minimum commission charged for trading any option on IB is USD 1.00 per order in the US and CAD 1.50 per order in Canada. The table below illustrates the tiered commission structure for options in the US.

IB U. S. Tiered Commission on Smart Routed Option Orders per month.

Data Source: Interactivebrokers.

Futures and Futures Options: IB charges both fixed rate and tiered (per trade) commission for its futures and futures on options. In the US market, the (all inclusive) fixed rate commissions are $0.85 for futures and futures options, $0.50 for Globex e-mini FX futures and $0.15 for Globex e-micro FX futures per transaction. In the non-US markets, the fixed rates are priced either as a flat rate per transaction (e. g. CAD 2.40 per transaction in Canada), or as percentage of the transaction (e. g. 0.05% of Swedish stock futures orders or 0.01% of Indian futures orders). The table below is an example of the tiered commission in the US and few other major markets.

Currency Forex: IB charges tiered spreads on forex trades, ranging from 0.20 bps, down to 0.08 bps of the face value, as shown in the table below.

Principal Amounts Traded per Month in USD.

Commissions = Basis Points, bps * Trade Value.

Minimum Commission per Transaction.

Data Source: Interactivebrokers.

Currency Margin: The requirements range from a low 2.5% (leveraged 40 to 1) for very liquid and stable currencies such as USD, GBP and CAD to a high 20% (leveraged 5 to 1) for volatile currencies such as the Russian rubble (RUB).

Bonds: Corporate bonds and municipal bonds (munis) trade in the US at the tiered commission rate of 10 bps or 0.10% of the face value of USD 10,000 (or less) and at the rate of 2.5 bps of the face value of more than USD 10,000 in principal. Treasuries transact at the tiered rate of 2.5 bps of the face value of USD 1 million (or less) in principal and at the rate of 0.5 bps of the face value of more than USD 1 million. The minimum commission for all bond trades is USD 5.00. We recommend that traders familiarize themselves with IB’s website for bond commissions in foreign currencies (e. g. HKD and EUR).

Metal Commodities (gold and silver): They trade on fixed commission rates of 0.15 bps of the monthly value, with $2.00 minimum per transaction. The annual storage cost of physical assets is 10 bps.

Contract for Difference (CFD): The non-index IB CFDs trade at the tiered rate, whereas the US tiered commission rate ranges from $0.0050 (with $1.00 minimum) for a monthly volume of $300,000 (or less), down to $0.0030 (with $0.65 minimum) for a monthly volume of more than $100 million. Meanwhile, the US and North American IB Index CFD contracts trade at fixed rates as follows: the US500 index is priced at 0.005% of the value per trade, the US30 index is priced at 0.005% of the value per trade and the US Tech 500 index is priced at 0.010% of the value per trade, all with a minimum commission of $1.00 per transaction. It is recommended that traders familiarize themselves with IB’s website for CFD commissions in foreign currencies (e. g. JPY and EUR). (For related reading, refer to An Introduction To CFDs ).

Mutual Funds: IB trades no-load mutual funds in the US only at the fixed flat rate of $14.95 per trade (no tiered pricing in the US), with an initial minimum of $3,000. The European funds trade both at the fixed rate and at the tiered commission rate. The fixed rate is 0.10% of the monthly trade value, with a EUR 4.00 minimum and EUR 29.00 maximum commission per transaction. The tiered commission rate, only applicable to European funds, ranges from 0.080% for a monthly value of EUR 1 million (or less), down to 0.015% for a monthly value of more than EUR 500 million, with EUR 1.25 minimum and EUR 29.00 maximum commission per transaction. (For related reading, refer to What's the difference between a load and no-load mutual fund? ).

Broker-Assisted Trades (only in the US) are priced as follows: Stocks and ETFs at $0.01 per share with $100 minimum, options at $0.95 per contract with $95 minimum, and futures and options on futures at $3.00 per contract with $300 minimum.

Interactive Brokers is ripe with many types of fees that traders need to be aware of (e. g. $500 trade bust/adjustment fee with the CME Group), and thus it is highly recommended that readers visit its website to familiarize themselves with IB’s extensive fees and pricing structure both in US dollars and foreign currencies (e. g. CHF). Mastery of the fee structure can play to traders’ advantage. For instance, traders subscribed to the non-professional market data package who transact at least $30 in commission per month will have the $10 cost waived off, which is also waived off in the first three months for an account with a net balance of $100,000.

Investment Products and Market Access.

TradeStation: Trade all the primary investment products: equities (stocks and ETFs), options, futures, fixed income bonds, T-bills, currencies and mutual funds at multiple exchanges. For a spread, traders can transact CFDs on commodities without any commission, and trade OTC microchip and penny stocks via the OTCBB.

Interactive Brokers: IB provides all the investment products that are available on TradeStation and some [including indices, single stock futures, futures on options, structured products, forex currencies, CFDs, warrants, metals commodities, callable bull/bear contract (CBBCS)]. One of the prominent features of Interactive Brokers is that it gives traders access to 100 market centers in 24 countries (e. g. the US, Canada, Mexico, Hong Kong, Singapore, Australia, the UK, France, Sweden and Japan) and a wide variety of tradable products. IB has one of the most versatile investment offerings among online brokerage firms. It has a marketplace where clients can access independent advisers for a fee.

Technology, Market Data and Research.

TradeStation: It is recognized by in the industry for having some of the best tools and technologies traders can have at their disposal. Trade at home, office and on-the-go on desktops, laptops, smartphones, tablets and the web. It provides highly customizable trading platforms (TradeStation and OptionStation) that enable advanced charting, option and Greek calculators, quick trade bar and sophisticated order-entry tools that enable complex option positions. The platforms allow traders to set up macros and keyboard short-cuts and preferred windows. Portfolio Maestro is a tool used for strategy back-testing and portfolio optimization. RadarScreen is a sophisticated fee-based tool that scans the market for opportunities and ranks them to assist the trader, and thus is highly recommended. TradeStation Labs is a team of analysts that assists traders to master the platform and provides insightful research and analysis. Recognia is an advanced technical charting tool that analyzes tens of thousands of investment products (equities, futures and currencies) at exchanges across the globe to identify the patterns of emerging opportunities for traders.

Interactive Brokers: IB also provides a very advanced platform and tools for sophisticated traders. Probability Labs and Option Calculator help option traders visualize the option mechanics and assist them in computing and analyzing option profit, Greeks and option probability distribution, including scenario analysis. Option Strategies Widget assists traders in the creation and testing of various option strategies. Traders get access to research, news feeds and market data from both Interactive Brokers Information System "IBIS" (own research and news service provider) and other vendors for a fee. IB Risk Navigator is a free tool that aids traders in managing risk from a portfolio perspective. Volatility Lab assists traders in mapping out historical, forward-looking and implied volatility profiles and skews. The PortfolioAnalyst tool performs periodic analysis (including comparative analysis of the S&P 500) across the various asset classes in the account based on the portfolio structure and risk/return characteristics. (For related reading, refer to Creating Automated Trading Systems Using Interactive Brokers: Automated Trading With Interactive Brokers ).

Competitive Edge: TradeStation’s core competitive advantage lies in its advanced technologies and tools that it makes available on its trading platform that rivals the very best (e. g. TD Ameritrade’s Thinkorswim). (For related reading, refer to Beginner's Guide To Thinkorswim Trading Platform ). TradeStation’s platform is among the most versatile and customizable systems, based primarily on the TWS system. Meanwhile, Interactive Brokers’ competitiveness centers on access to about 100 international markets across 24 countries, and to a very diverse pool of investments products. IB’s ultra-low margin rates are very attractive to short sellers , futures traders and institutional groups (e. g. proprietary trading firms). A unique feature of IB is its investors’ marketplace that matches traders with various service providers (such as independent brokers and advisers, hedge funds, money managers, education and research providers, and others). Another key advantage of Interactive Brokers is that it is known for delivering value price improvement through its Smart-Router. Option traders can direct their smart-routed orders of non-marketable securities to an exchange that offers the best rebate or liquidity.

Suitability: These brokers are neither ideal nor recommended for beginners who will most certainly find themselves dazed with these very advanced platforms that require a steep learning curve and the complex fee structure. TradeStation is the best for sophisticated and institutional traders who can best use its advanced technologies, willing to pay for value-added tools and research, and can comprehend and effectively navigate its fees and pricing schemes to their advantage. Again, Interactive Brokers is most suitable for sophisticated traders who can pay for its tools and research (mostly provided by third parties), and can find value in paying for its various services, navigate its very complex fee structure to their advantage as well as can afford and find value in its services on the whole. Most importantly, IB is best suited for traders who value diversification of investment products and access to international markets.

These brokerage firms target the same clientele (seasoned, well-funded and active traders) with few differences, and this is evidenced by their minimum monthly activity fees mentioned above. Day traders and institutional traders who can trade the necessary volume, have the skills to maximize the value of the tools and products from these brokers, and can minimize the average costs will benefit the most from these brokerage firms. Due to the complexity of the platforms and burdensome fees, these brokers may be detrimental to new and inexperienced traders, infrequent traders and those who are not well funded to take advantage of the pricing schemes. These brokers attract traders with the promise of advanced tools and greater access to markets and investment choices, including international exchanges, and not on the basis of simple and cheap pricing structure or attractive promotions. As both brokers are riddled with numerous and complex fees, traders should spend sufficient time to familiarize themselves. Interactive Brokers has an especially complex fee and pricing structure. Given the complexity of these fees, we recommend traders to visit each broker’s website and extensively study the pricing and fee structures.

OptionTrader Statistics.

An optional Statistics  panel displays option-related statistical data for contracts with a stock underlying. You can elect to display the following statistics:

Identifies the exchange(s) that are posting the best bid price on the options contract.

The option model price is calculated using the underlying price, the interest rate, dividends and other data using the Model Navigator .

Identifies the exchange(s) posting the best ask price on the options contract.

Displays the 30-day historical volatility for an option. Right-click the field header to toggle between Daily or Annual,

Opt Implied Vol.

A prediction of how volatile an underlying will be in the future. The IB 30-day volatility is the at-market volatility estimated for a maturity thirty calendar days forward of the current trading day, and is based on option prices from two consecutive expiration months.

Opt Open Interest.

Charts the total number of options that were not closed.

The total number of contracts traded over a specified time period.

Change in volatility from the previous day's close.

Opt Volume Change.

Change in option volume from the previous day's close.

Put option volume for the day divided by call option volume for the day.

Call option volume for the day divided by put option volume for the day.

Put/Call Open Interest.

Put option open interest for the day divided by call option open interest for the day.

Call/Put Open Interest.

Call option open interest for the day divided by put option open interest for the day.

Open Interest Change.

Change in open interest from the previous day's close.

To display the OptionTrader Statistics panel.

Click the "s" icons in the toggle panel located in the top right corner of the OptionTrader.

Interactive Brokers: A Review for Options Trading.

Here's a review of Interactive Brokers from the perspective of an investor who uses stock options in his or her portfolio.

Stock options are more than just a way companies pay their workers. Investors can buy and sell stock options to hedge their portfolio, generate income from covered calls, and speculate on short-term moves in stock prices to earn higher returns on their investment. As some brokers prioritize options trading over other types of investing, it's important to pay attention to the details before opening a new brokerage account.

Let's review how Interactive Brokers compares for investors who want to use stock options in their portfolio.

Standard trading commissions.

Interactive Brokers uses a variable commission schedule that makes it stand out in the world of stock and options trading. Rather than pay a mostly fixed rate, Interactive Brokers' commissions vary by trade size and the value of each option.

Stocks and ETFs.

$0.005 per share ($1.00 minimum)

Options worth $0.10 or more.

$0.70 per contract ($1.00 minimum)

Options worth more than $0.05 but less than $0.10.

$0.50 per contract ($1.00 minimum)

Options worth less than $0.05.

$0.25 per contract ($1.00 minimum)

Data source: company website.

Importantly, Interactive Brokers also offers a variable commission schedule under which options, stocks, and ETFs can be traded at even lower prices. Commission prices generally decline with volume, which is advantageous for its most active clients. Learn more about special offers for opening a new account, which can add up to thousands of dollars in value in the form of commission-free trades and cash bonuses.

Multi-leg options and exercise and assignment fees.

While it's relatively straightforward to buy a call or put option, some strategies require simultaneous orders of different options contracts. The long strangle option strategy requires the simultaneous purchase of a call and a put option, for example. Depending on your broker's commission schedule, these options trades can become costly, and quickly.

Type of Transaction.

Fees and Commissions.

Buy to close fee for low-cost options.

Standard commission schedule.

Data source: company website.

Interactive Brokers' commission and pricing schedule is designed to benefit traders who make use of complex strategies, or who intend to hold their options to exercise or assignment. The broker doesn't charge a fee when options are exercised or assigned, and its commission schedule offers lower prices for low-priced options contracts. It is one of a few brokers that don't charge for this occurrence.

People who use covered calls, for example, would prefer a variable commission schedule like that offered by Interactive Brokers, as commissions decrease with the price of an option. When you write a covered call, you are effectively shorting an options contract. As the options contract declines in price, buying to close the position will incur a smaller commission. For example: You might pay $0.70 per contract to write covered calls worth $1.00 each. Later on, the option price might fall to $0.05 per contract, at which point you'd pay a commission of just $0.25 per contract to buy-to-close the contract.

Similarly, those who want to buy low-priced puts or calls will pay a lower commission to do so, resulting in commissions that make up a lower percentage of the amount invested.

Interactive Brokers' stock option commissions decline with the price of a put or call option. Image source: Getty Images.

Options research tools.

Although discount brokers are known for offering less in the way of research and support, many offer free access to research and trading tools designed to help their investors make better investment decisions. Many of these tools come free just for having an account.

Interactive Brokers' Options Analytics tool allows you to explore an options contract from the perspective of profitability, max gain or loss, and view the "Greeks," which are automatically calculated next to each contract. These tools can be especially useful for investors who use more sophisticated options strategies.

Minimum deposit requirements for options trading.

Interactive Brokers currently requires a $10,000 minimum deposit for most investors, although this minimum is decreased to $5,000 for IRAs, and $3,000 for individuals who are 25 or younger.

After making a minimum deposit, investors will be able to complete basic options trades. More complicated strategies and those that involve higher risk -- selling naked puts or calls -- will typically require a higher equity balance, and minimums are subject to change depending on the brokers' assessment of the risk of each trade.

Keep in mind that Interactive Brokers waives minimums on accounts with a balance of $100,000 or more. However, for those who don't meet the minimum account balance requirement, Interactive Brokers requires that traders generate at least $10 in monthly commissions.

Accounts that don't meet the minimum trading volume requirement will have their monthly commissions automatically rounded up to $10 during that month. For example: A client who spends $5 on commissions in one month will see an extra $5 fee added on during the month to bring that person up to the minimum commission level. This may make it less attractive to people who don't intend to keep a high balance or don't anticipate trading frequently.

Interactive Brokers as an options broker.

Interactive Brokers is designed with the active trader in mind. Its commission schedule favors active options traders, as well as those who hold options until exercise or assignment, as it doesn't charge a fee for either event. That said, its higher minimum deposit requirement as well as inactivity fees ($10 minimum monthly commissions) may not make it cost effective for the infrequent options trader. To be clear, The Motley Fool does not endorse any particular brokerage, but we can help you find one that is a good fit for you. Check out the Fool Broker Center to compare several brokers all on one page and to see if you qualify for extra perks just for opening an account.

Jordan Wathen owns shares of Interactive Brokers. The Motley Fool recommends Interactive Brokers. The Motley Fool has a disclosure policy.

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