10 Best Options Trading Platforms UK 2023 In-Depth Reviews Leave a comment

So, rather than buying shares now, you buy a call option on Tesco shares with an expiration date of 30 days. You’re given a strike price of £170, meaning you’ll have the right to buy Tesco shares at this price no matter what happens. An option contract is considered to be “in the money” (ITM) when the asset price exceeds the strike price before or on expiration.

Fast forward a few weeks, and the market price of Tesla’s stock has fallen to £500 per share. Your put options are now “in the money” and can be exercised to sell the stock at what are sector exchange traded funds the higher £700 strike price. This means that for each put option, you can sell the stock at £700 and buy it back from the market at £500, earning a profit of £200 per share.

For example, using a spread bet to buy a call option at £10 per point of price movement will earn you £10 for every point that the option’s value increases. Because share prices are volatile, an option’s premium will fluctuate as the probability of that option being profitable on or before its expiry date changes. Generate potentially profitable stock and option combinations, based on your forecast for stock and ETF prices, market volatility and other market variables.

• This means that you’ll pay a smaller deposit (known as margin) to open your trade but will have your profits or losses calculated based on the full position size.
• To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product.
• Interactive Brokers makes them all accessible from one streamlined and centralized platform.
• It also protects against the underlying asset losing value, as you receive the premium even if it does.
• Stop-loss orders for option trades are also available from AvaOptions.

This will allow you to get to grips with how a platform works without risking real money. You can also develop strategies and build your understanding of how each platform differs. Options trading has become exceedingly popular over the past few years, with more people than ever before interested in options trading. Options trading offers less liquidity which can make it tricky for a trader to enter or leave the trade. Depending on what the goal of the options trader is, there is normally a suitable options scenario that’s an appropriate fit for the trader’s goal.

Trade on volatility itself

If you’re ready to get started, then the Saxo Bank may be worth a look. FInd the tools they need to execute a full trade, including charting and analysis tools and order management tools. You can access all of the trading tools you need from a single trading platform, so you don’t have to switch between multiple screens or programs. So, you should find some of the most reasonable prices on the market. Remember, CFDs are a double-edged sword, perhaps in an even more extreme way than options contracts. We highly recommend that you activate the ‘negative balance protection’ feature.

Other types of exotic options include knock-out, knock-in, barrier options, lookback options, Asian options, and Bermuda options. Again, exotic options are typically for professional derivatives traders. The distinction between American and European options has nothing to do with geography, only with early exercise.

• One way you can avoid losses is to never apply long call options blindly without doing enough research on the options you plan to trade.
• Traders also have the chance of greater risk exposure and opportunities with longer expiry.
• Fees for each contract with IBKR vary depending on how many contracts you trade each month, from £0.60 per contract down to £0.15.
• The trading platform is full of powerful, comprehensive features on a user-friendly interface.

Therefore, most options trading platforms will provide users with research and analysis tools that can be used to make informed trading decisions. 69.80% of retail investor accounts lose money when trading CFDs with this provider. In this guide, we will take a closer look at the available UK options trading platforms to establish the key features that are offered by each one.

What Assets Can You Trade Options With?

With each contract, you’ve agreed in advance on what price that asset will be sold or bought at. To help you get started, here are five popular tips for options trading in the UK. To explore this question in detail, let’s look at an options trade for BT shares. Additionally, you can seek FSCS insurance which safeguards client monies of up to £85,000 in the event of a broker default. Say you expect that an asset will stay within 10% of its current levels over the next month, then this strategy can help you capture profits from limited volatility. After taking into account the £1,000 premium you paid to purchase the put options, you’ve made a net profit of £19,000.

This contract gives the trader the right but not the obligation to purchase the asset when the strike price is reached before a specific expiry date. The first thing you need is a broker that offers access to the the world’s largest foreign exchange market is located in type of options you want to trade. You can compare options brokers in our options broker comparison table. All the brokers we feature are regulated by the FCA and offer access to on-exchange and OTC options.

There is a wide range of expiration dates and strike prices available, so you still have flexibility when trading options with Plus500. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, or any of our other products work, and whether you can afford to take the high risk of losing your money. Binary options trading in the UK is a popular form of online trading. Binary options combine high potential returns with a straightforward yes or no proposition, making them accessible for British investors new to the financial markets.

Ava Trade – Options Trading Platform for Forex Pairs

Therefore, we have listed a brief guide to the main fees that you should think about before choosing a provider. While it is not illegal to use an unregulated platform in the UK, it is not advised. Find out more about a range of markets and test yourself with IG Academy’s online courses.

Interactive Brokers – Best for Options Trading in the UK Market

This information has been prepared by IG, a trading name of IG Markets Limited. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

If you deposit your money in Pound Sterling (GBP), you will be charged currency conversion fees upon deposit and withdrawal. An alternative is to use a low-cost currency conversions service such as Wise or Revolut. In addition to the above, make sure you check whether or not any currency conversion fees apply when accessing non-GBP markets. If you want to get started with AvaTrade, you can open an account by meeting a £100 minimum deposit.

But particularly for more seasoned traders, it’s a useful addition. Search for the asset, expiration date, and strike price that are right for you, click on it to open a detailed page for that option. This guide is a great place to start learning about UK options trading. But if you really want to understand the ins and outs of trading options, take an options trading course.

Information provided on this website is for guidance only and should not be deemed as financial advice. If in doubt, seek professional advice from an FCA regulated advisor. The value of your investment may fall as well as rise and you may get back less than your initial investment. While this does afford you the ability to make larger trades with the potential for greater gains, it also means any losses you incur will be magnified too. That means you are buying options that are “out the money”, which will typically have lower premiums than for a long straddle.

Types of Options Trading in the UK

When you trade stock options with us, you’ll use spread bets and CFDs to speculate on movements in an option’s premium, without ever owning the option itself. This means you could get certain tax benefits,1 you don’t have to take delivery of physical assets, and you’ll have more control over your position size. Interactive Brokers, does offer cheaper charges on US option contracts, however, Saxo has more of a base in the UK. Options can be quite simple and quite complex, and in many cases, there is the risk of losing your entire premium. If you do not fully understand the risks involved in options trading an options broker should not allow you to open an options trading account. Married puts – this describes a similar session situation to the above.

British brokers are currently banned from offering binary options to retail clients in the UK. With being said, investors can trade binary options in the UK by using offshore or unregulated brokers. Binary options in the UK are a high-risk, high-reward form best index funds 2023 of online investment. The trader predicts the direction the price of a British stock, for example, will move. If their prediction is correct, they win the predefined amount of money but, if the prediction is wrong, they lose the capital they invested.