8 Best Options Trading Platforms In Canada

The 8 Best Options Trading Platforms In Canada

1. Qtrade Investor

Qtrade is, without a doubt, the best day trading platform in Canada. It’s been around for more than 20 years and is currently offering a $50 signup bonus for new users.

Qtrade is owned and operated by major independent wealth management company Aviso Wealth, and it is currently the best online broker for day trading in Canada. Qtrade offers advanced research tools and has the lowest fees in Canada. I’ve personally used Qtrade for years, and I can’t recommend it highly enough.

If you're an experienced investor, you can sign up for their paid subscription, Investor Plus, and access preferential commissions. You will also qualify – for free – if you have more than $500,000 in assets or if you completed more than 150 transactions in the last quarter.

For regular traders, commissions start at $8.75 per trade + $1.25 per contract. Active traders who make over 150 trades every quarter or have at least $500,000 in assets have to pay just $6.95 per trade + $1.25 per contract.

There's a quarterly fee of $25, waived if you have over $25,000 in assets or you've completed at least two transactions during the previous quarter.

Qtrade has a few restrictions to trade on margins: you must have at least $2,000 in cash or other securities. If you're shorting stocks, buying or selling spreads, or trading equity options, the minimum rises to $10,000.

Index trading options have a minimum of $25,000.

2. Questrade – Best For Data Packages

Questrade is a great option for self-directed investors looking to trade options. With Questrade, you can build your own portfolio from the ground up, or invest in some of their pre-built, expertly-made portfolios.

Questrade has been in operation for over 20 years and onboards 250,000+ new clients each year. It's regulated by the IIROC and is a member of the Canadian Investor Protection Fund (CIPF).

Commissions on options with Questrade start at $9.95 per trade + $1 per contract for regular traders.

Questrade offers active traders two plans:

Questrade also offers access to advanced data packages, ideal for experienced investors looking to gain an edge. The advanced data packages cost $89.95/month, and if you subscribe, you automatically qualify for active trader discounts, even if you don't complete 150 trades per quarter.

Overall, Questrade stands out from the rest of the pack as one of the best options trading platforms in Canada. If you want a reliable, well-supported platform for trading options, look no further than Questrade.

3. Interactive Brokers

Interactive Brokers is our top pick for the best options trading broker in Canada.

With IBKR, you can trade stocks on over 90 exchanges around the world, including some in the US, Asia, and Europe. There are currently over 1.8 million active traders in over 200 countries that use IBKR.

One very interesting feature of IBKR is the Global Analyst Scanner, which can be used to find undervalued stocks around the world. You can set your own parameters like sector, country, and market cap to find the investments that better fit your portfolio.

Another great feature is the IBKR GlobalTrader, a test environment where you can try out your strategies at no risk.

For Canadian traders, the commissions are very reasonable: trades have a minimum of $1.50 per order, and fees are tiered based on the volume of trades per month:

• For a volume of fewer than 10,000 trades per month, the fees start at $1.25 per contract.
• For a volume between 10,000 and 50,000, the commission drops to $1.15 per contract.
• For volumes between 50,000-100,000 and over 100,000, the fees are $1.05 and $1 respectively.

The minimum charge of $1.50 still applies to all tiers.

The commissions are $0.25 to $0.65 per contract for trading on American exchanges, depending on the option's price, for less low-volume traders: less than 10,000 trades a month. The minimum charge is $1.

The more contracts you sell or buy, the lower the commissions.

For US options, they can be as low as $0.15 when you trade more than 100,000 contracts a month.

4. CIBC Investor's Edge 

CIBC IE is among the best and most trusted options trading platform in Canada, mainly because it is linked and backed by CIBC, one of the largest banks in Canada.

Some of the best features of CIBC IE are its research and screening tools and advanced charting graphs to help you choose the right investments for your portfolio.

It also supports stop, limits, and trailing stop orders, and your funds are insured by CIBC.

For regular traders, commissions start at $6.95 per trade + $1.25 per contract.

For students with a CIBC Smart Account commissions are $5.95 per trade + $1.25 per contract.

For active traders (over 150 trades every quarter) commissions are $4.95 per trade + $1.25 per contract. 

There are no account minimums to start trading, and CIBC offers simple directions on creating an options trade. Furthermore, there is a $100 annual account fee if your balance is less than $10,000.

Rates are even lower for students, and frequent, and advanced traders.

5. National Bank Direct Brokerage 

National Bank Direct Brokerage is another options trading platform backed by a big bank, this time it is backed by the National Bank of Canada.

You can create an account and start investing in less than 15 minutes, and you can use the myriad of investing tools to simplify the investing process.

Some of the best features include Market-Q, an integrated tool that displays real-time data so you can take advantage of price changes, and the OptionsPlay analysis platform, which provides market forecasts and allows you to compare up to three different strategies side by side. You can also create watchlists to keep track of your favorite stocks.

It has very low commissions starting at $0 per trade + $1.25 per contract, with a minimum of $6.50 per trade.

For transactions below $2,000, the fee is capped at $19.95.

6. TD Direct Investing 

TD Direct Investing is another online broker linked with a big bank. In terms of variety, TD is at the top. Whether you're a beginner looking to start investing or an experienced investor, you can choose from one of the four distinct platforms.

The WebBroker platform offers weekly special reports and market research sources like Morningstar and TD Economics.

The TD App offers deep insights and dynamic full-screen charting. The Advanced Dashboard offers financial statements, ratio analysis, and analyst ratings. The last is the thinkorswim platform, but it's only available in the US.

For regular traders, commissions start at $9.99 per trade + $1.25 per contract.

Active traders (over 150 trades per quarter) pay $7 per trade + $1.25 per contract. 

7. RBC Direct Investing 

Next up is RBC's Direct Investing online broker. Backed by the Royal Bank of Canada, it offers free real-time quotes on your investments and Level 2 quotes for stocks and ETFs. You can also set up watchlists to receive alerts and market commentary.

Like TD Direct Investing, it offers several platforms for each type of investor.

For options trading, RBC Direct supports call, put, covered calls, and naked puts. Before you start investing, you can also use a risk-free practice account to test out your strategies before you start investing real money.

For regular traders, options trading commissions at RBC Direct Investing start at $9.95 + $1.25 per contract. Active trader pricing drops to $6.95 + $1.25 per contract for more active traders with over 150 trades per quarter.

8. BMO Investor Line

BMO InvestorLine is an online trading platform that seeks to give the best research and expert analysis to its investors. Like many others on this list, it is backed by a large bank, the BMO, one of the big five banks in Canada.

Some of its best features include top research on both Canadian equities and US equities, analysis tools like graphs, and benchmark tracking.

BMO InvestorLine offers access to over 2,000 stocks across all major North American Exchanges: TSX, NYSE, NASDAQ, and more.

You can also set up alerts and make trades from the smartphone app.

If you make more than 15 trades per quarter or invest a total of $250,000 or more, you gain access to preferred rates and lower pricing, professional tools like MarketPro, and dedicated customer support.

What Are Options?

Options contracts are financial instruments that allow investors to sell or buy an underlying security at a fixed price on or before a certain date. This security can be pretty much anything from a penny stock to real estate. Until recently, you could only invest in option contracts through brokerage accounts, but now even Mutual Funds can write options contracts as a part of their investment portfolios.

The buyer or owner of an option has no legal obligation to act on the security by the specified date, and the buyer or owner pays a premium in return for this privilege.

The two basic options contracts are call options—a contract that gives the owner the right to purchase a security for an agreed amount at some point in the future—and put options, a contract that gives the buyer the right to sell a security for an agreed price by a certain date.

If the contract owner doesn't exercise the option, it's said the option expires.

One common scenario is when a security is trading below the fixed price set in the contract; in this case, selling the security for that price would lose you money.

What Are Options Trading Platforms?

Options trading platforms and interactive brokers are usually operated by online brokerages and are comparable to stock trading platforms, except for people looking to trade options.

Active traders involved in day trading would benefit from online brokers, which provide a range of trading tools while maintaining low costs. 

Depending on the trading platform you use and the number of assets you have, some brokers provide better customer service, free stock trading, and lower commissions.

Options trading is a very high-risk investment. Depending on the strategy used and the side of the trade you're on, it may be catastrophic.

Your greatest loss as an option buyer is determined by the premium you paid. However, the potential loss is almost limitless when you sell an option contract.

What To Look For In An Options Trading Brokerage

Before you choose a brokerage for option trading in Canada, here are some things to consider:

• Trading commissions: The best options trading platforms will have lower commissions and trading fees. Keep this in mind as you choose a brokerage, as this can quickly eat away at your profits.
• Account balance and minimum investments: When trading options, remember that most brokerages have a minimum balance to start trading options. Make sure you're not risking more than you can afford to lose.
• Research and data subscription: To make the most out of options trading, you need real-time information, so choose a data plan carefully this can be the difference between making or losing a lot of money.
• Order types available: Look for brokerages that offer a lot of market order types, as it will give you better control of your investments.

In Summary

Options contracts are financial instruments that give the buyer the right to buy or sell a particular security at a fixed price. Options can work as insurance when selling, but they can also lead to almost limitless losses; trading with options is a very risky endeavour, especially for inexperienced investors.

Many trading platforms in Canada provide a safe environment to start investing in options, with some even requiring previous trading experience. Options trading is not for beginners, but if you're an experienced trader looking for the best platform with the lowest fees and a wide variety of research tools, we recommend Qtrade.

From now until April 21, 2024, use our Qtrade link to get a $50 signup bonus – and up to $2,000 cash back –when opening your account.