Best Broker For Options Trading In Australia In 2022

Start trading options contracts with the best options trading platform in Australia featured on the webpage. Our team has tested a lot of online brokers to select the most reliable and convenient online trading websites that will correspond with different traders’ tastes and needs.

What Is Options Trading?

Options trading is the trading of the instruments that are giving you the right to buy and sell  certain investments for a defined price on or before a specific date. Such trading of contracts connected to different underlying assets when employed appropriately can ensure numerous benefits including the possibility to generate income, neutralize risks of price fluctuations, and speculate. With an option on your hands, you get the opportunity, not an obligation to trade the assets behind it. Select the best Australian options trading platform first and dive onto the world of successful options trading.  

What Can Be Traded As Options

Option contracts can present a large variety of assets to trade. Whether you are an experienced trader who is used to trading, for example, stocks or bonds, or a beginner who would like to try trading in a more risk-free manner, options trading would be perfect in both cases.

Stocks

Stock options bring an investor the right to trade stocks on a predetermined day and time. As a rule, one option contract of such type equals 100 shares of stock. Call stock options are bets on the price increase of the underlying asset while put stock options are, on the contrary, bets on its decrease. If you use American-style trading, it allows you to buy/sell an asset at any moment before the expiration date. With the European set of rules, the only possibility to buy/sell an asset comes exactly on the expiration date.

Indices

Among various types of options on one of the best options trading platforms in Australia, you will be able to find index options. The underlying assets of the options are stock indices like S&P 500, Nasdaq Composite, or Dow Jones. Investors, who purchase the options, get with them the opportunity to trade the asset behind during a certain period of time. One of the main advantages of the type of options is the possibility for an investor to hugely diversify his/her trading portfolios. It happens due to the fact that index options are based on a big bundle of stocks in one index. The main difference between this type of option and the stock option is that they can operate only in European-style trading.

Commodities

There are put and call commodities options that can be traded in the American or European styles. The contract allows an investor to buy and sell goods like precious metals, food, oil, etc. for a set amount of funds and up to a defined day. Though commodity options contracts show themselves as a great investment strategy in any market setting, we still feel that the assets work best when prices are at their most volatile.

ETFs

ETF options are typical to put and call contracts on the exchange-traded funds that are the assets behind the contracts. ETFs present a bundle of securities that follows an index and can hold a variety of assets, like stocks, for example. One option contract includes 100 ETF shares. When we take adjusted contracts, they may somewhat differ in the number of ETF shares which depend on dividends, corporate operations, and mergers.

Bonds

An option contract with a fixed-income security that shows an investor’s debt to a borrower as an asset is known as a bond option. These can also be call and put options, most of them referring to the American style trading that brings an opportunity to an investor to exercise them whenever he/she wants before the expiration date. Bond option holders can trade them on the secondary market, but the derivatives for them have a much smaller scope compared to other kinds of options.

Best 10 Australian Options Trading Platform

Plus500 – a regulated ASIC and FCA platform was launched in 2008 and since then has shown itself as one of the most reliable trading platforms for options with the highest standards out there. Among the benefits of the broker are low commission fees compared to its competitors.

AvaTrade – one of the best options trading platforms in Australia that enables trading via a secure mobile application where you can find the possibility to trade other assets besides options.  The undeniable advantage of the broker is that it doesn’t charge any brokerage fees.

CMC Markets – a well-established broker that has been in the industry for about thirty years. It features a great choice of platforms to trade on like MT4, Stockbroking Pro platform, and others.

CommSec – an Aussie trading site known for its easy-to-use platform and minimum entry requirements. When you register with the broker, you will get access to the most advanced research tools like state-of-the-art charts.

IG Markets – is the oldest and most trusted Australian broker that was established in 1974. Through the years it has been improving and adjusting to the requirements of the modern world, offering a great range of options assets to trade.

Interactive Brokers – the US-based broker that can boast of low commission fees and the relation to more than 100 global markets. Works best for traders who have already got certain experience in options trading.

Capital.com – one of the best brokers for options trading in Australia that would be an excellent choice for beginners as it opens access to various superb educational tools and materials. You can expect 24/7 customer support and access to the resource via a web page or mobile application.

eToro – is a relatively new broker in the industry based in Australia that has already earned a good reputation. Offers demo account, exquisite copy, and social trading instruments.  

easyMarkets – the second-oldest platform on the list, as it was created back in 2001.  The platform does not offer such a wide range of topics as the above-mentioned brokers, however, it is a perfect website for the beginner traders.     

Stake – a very convenient platform with two accounts to choose from – the Standard and the Black Account, both of which imply commission-free trading for Australian customers. Guarantees the insurance of up to $500,000 via the SIPC insurance corporation. 

How To Choose Best

Even among the list of the best websites, it may appear challenging to pick the platform that will correspond to all your needs. If you are still not sure how to select the best Australian options trading platform, use the guide below that we prepared for you.

Features

Options contracts are quite sophisticated financial tools, making it highly desirable for a platform to provide a comprehensive set of instructional tools. These may include a glossary of most commonly used terms, dedicated posts and articles, podcasts, and video tutorials explaining trading strategies. Also, turn your attention to the usability and convenience of the platform you select. A user-friendly interface with all the necessary trading tools at hand is a must, as well as the range of payment options.

Trading Costs

Best brokers for options trading in Australia abandoned flat-rate fees and take only minor commissions for some options contracts. This implies the absence of charges for trading options contracts , but the presence of fees that depend on the amount of the contracts bought or sold. As a result, if you decide to trade 100 options contracts, it will cost more than trading just 20 of them. The price for a single contract differs from broker to broker. However, for most of them, the investment for a contract varies between $0 and $1.00.   

Access To Market Data

Access to the market data that synchronizes in real-time and provides traders with the most accurate information is one of the key features that distinguishes the best Australian options trading platform from other not very reliable brokers. To check whether the broker of your choice provides traders with the possibility to view and analyze relevant market information, see what charting instruments you can find on its site. Consider what kind of information you can derive from the charts, how simple it is to transition between the technical side and reading and modifying the market data for future implementation. On top of that, pay attention to whether the site offers access to both domestic and international markets, different industries and sectors, news reports, financial statements of companies, etc.    

What To Trade

Make sure that the broker that evoked your interest offers enough types of options contracts to choose from. The more varieties of underlying assets represented in the contracts, the better it is for your trading portfolio. However, if you are a beginner trader, focus on a single type to get used to the type of trading. In this case, pick a type of options contract the best suitable for you and find the broker offering this particular type. Use copy trading features that the best options trading platforms in Australia usually offer to their customers who are at the start of their trading careers.

Potential Benefits

Take into account the potential benefits that come with a platform when you register on its site. For example, it may be a range of bonuses that a broker grants its customers. Like a welcome bonus that may take the form of free funds, you can use for trading on the platform, or a refer-a-friend promotion that grants you when a person you recommended the site signs up to. Another feature you can hugely benefit from, especially as a beginner trader, is the possibility to start with a demo account on a trading platform. In this way, you can both test the full functionality of a site and develop your trading skills that will become useful for real money trading. 

Customer Support

Another thing that is better to consider before you make up your mind regarding an options trading platform is the quality of customer support service. Check if the site offers your preferred contact channel—chat, email, or phone. You can always test the support service before you start trading with the broker. Remember that the responses provided by support agents should be swift, relevant, and informative. If you choose one of the best brokers for options trading in Australia we offer above, you can be sure to get all this as we tested a lot of features including the customer support service on each of the websites.  

Account Security

The high account security on an options trading broker site equals the high security of your funds and sensitive data. The transmission of information on the website should be provided via the safest encrypted channel. Moreover, two or even more than two-factor authentication is a preferred option when we talk about signing in to your account. Make sure you activate the option to increase the level of security when you access the site. You can also enable the notification messages that will signal you about any activity in your account.      

Device Compatibility

Modern traders count on the accessibility to all the trading instruments through any device at any time and place. It can be provided by the best options trading platforms in Australia that offer highly adjustable websites that work in an easy-to-use format on different gadgets. To increase the compatibility with mobile phones and tablets, many of the brokers offer specially created iOS or Android applications.  Thus, with such platforms, you will always have the chance to trade professionally wherever you are and with any device that can be connected to the Internet. 

Benefits Of Options

Traders often prefer options contract trading to other types of trading because it offers a bundle of benefits. It is especially advantageous to those who’d like to keep their trading portfolios in excellent condition.

Protect Your Portfolio

There are several popular strategies that you can apply for protecting your portfolio when trading options contracts. For example, when you purchase puts, you gain some profit with the price falling. To illustrate the case, let’s refer to the 2008 financial crisis when prices of stocks decreased, but the prices of options put, on the contrary, increased. One more strategy that involves little risk and guarantees the protection of your portfolio is to initiate collars. In this case, you need to have 100 shares and purchase a put option, ensuring the right to sell the shares. At the same time, you sell the call option, enabling someone else to acquire these identical shares. You are most likely set up with no out-of-pocket expense.   

Generating Income

Buying and selling options can generate a considerable income during both situations: when the market is highly volatile and when the volatility goes down. It is possible because the strategies that can be applied while trading options can profit from the price fluctuations on various assets regardless of market conditions. For example, if the price of an asset behind an option climbs over the strike cost before the expiration date, the one who purchased a call option will get an income. If the price goes down, the trader who bought a put option will benefit financially from it. 

Requires A Small Initial Outlay

One more great advantage of trading options contracts with the best options trading platform in Australia is that you can start with a smaller initial financial investment if you compare the type of trading with stock trading. The cost of purchasing an option contract is far lower than the cost of purchasing shares. An investment in options will allow you to spend less money out of your pocket , but if the deal is successful, the options’ investor will profit as much as the stock investor.

Diversified Portfolio

Don’t forget that with options trading, you can easily diversify your trading portfolio. You can do this in two ways: buying and selling options contracts with various underlying types of assets and varying the choices inside the asset types. You can choose from stocks, indices, commodities, ETFs, etc. Within the presented categories, invest in different firms, sizes, and numbers of contracts. And make sure that you include businesses from a range of industries.  

Trading Options In Australia

Purchasing and selling options contracts are legal in Australia. Australian Securities and Investments Commission (ASIC) is the official regulatory body of market activity in the country. ASX also operates under the ASIC regulation and from 17^th of June 2022 options trading must follow the ASIC Market Integrity Rules (Capital) 2021.

Laws And Regulation

Options trading is regulated in Australia by the ASX – Australian Securities Exchange. The regulatory body defines the number of shares per contract (which is usually 100 per contract). Legal trading via the ASX allows traders to buy the contracts in the biggest Australian public firms. It is crucial to remember that even though all options can’t be traded without the ASX regulation, you establish obligations with a broker when buying and selling the assets. ASX doesn’t have any contractual obligations or relationships with traders.

Conclusion

Options trading is a wonderful opportunity to enter the trading market for those who have clear expectations and definite aims. With options contracts, traders will be able to protect and diversify their trading portfolios, invest on a smaller scale and expect a bigger return. The type of online trading is officially regulated by the AUS trading commission, making it a lawful and legal activity in the country. With one of the best brokers for options trading in Australia, you can find a platform for yourself where you will be able to trade securely and use the most convenient features a broker can provide its traders with.     

Frequently Asked Questions