What is the best place and what are the requirements there to do stock options trading?

Question

Looking for a place to do stock options trading and experiment with a couple of trades first. Any recommendations?

Well Nick, you are just full of fear aren't you? Apparently you are doing quite well at it and don't want anyone else in or else you are to ignorant to be able to do it yourself. When you tell somebody that something is not worthwhile, how about next time descibing a situation that looks profitable and explain why I might loose money doing it? Then maybe your arguement might have merit!

Answer 1

You can trade options with almost any brokerage, so if you already have a broker you like you might want to check with them first.

The three brokerages I see recommended most often on options message boards are

(1) Interactive Brokers (IB)

http://www.interactivebrokers.com/en/main.php

There are a lot of people who believe IB has the best rates for trading option, but there is also a fair amount of agreement that they do not supply you with a lot of support in your trading.

(2) Options Xpress (OX)

http://www.optionsxpress.com

This brokerage, as you might guess from its name, reportedly has some of the best tools to help option traders.

(3) Think or Swim (ToS)

http://www.thinkorswim.com/tos/client/index.jsp

This strangely named brokerage was created by professional option traders and has a reputation for being willing to spend more time talking with you and helping you with your option trades.

Every brokerage is required to get an agreement from you that you understand the risks of trading options. Most brokerages have different option trading levels which allow you different types of option trades. The higher the level, the more types of option trades you are allowed to do. Each brokerage has criteria for determining what level you can get. the criteria may include experience, account size, and in some cases even your annual income.

Answer 2

Unless you have an MBA in Finance from an excellent school, or a large portfolio of underlying assets that you need to hedge, restrict your experimentation to pencil and paper or a spreadsheet, taking all the spreads and fees into account.

It is standard Wall Street wisdom that the only people who consistantly make money in options are those who sell "covered calls". Everything else is stacked against you.

Most brokerages will trade options for you. As I said, you might as well set your money on fire if you're not already rich and just protecting your portfolio, or a math whiz with an advanced finance degree.

Answer 3

You can do stock options trading at Merrill Lynch.