Best Forex Options Brokers in 2022
The ForexBrokers.com annual forex broker review (six years running) is the most cited in the industry. With over 50,000 words of research across the site, we spend hundreds of hours testing forex brokers each year. Here's how we test.
The best forex brokers for forex options trading in 2022 provide multiple trading tools and options products to help distinguish their offerings from the competition, in addition to being highly regulated and trustworthy.
Trading through a regulated venue provides greater confidence to traders that the pricing methodology and execution policies have a high level of integrity.
For example, forex traders in Europe can access exchange-traded forex options through regulated exchanges known as Multilateral Trading Facilities (MTFs). In addition, regulated forex brokers also offer options trading in the off-exchange market.
That’s why it’s crucial to only trade forex options with a regulated and trusted firm. All types of forex options trading should be considered high-risk investments.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 65% and 82% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Best Forex Brokers for Options (Turbos)
Here's a summary of the best forex brokers for options (turbos) trading.
- IG - OTC and MTF-listed options
- Saxo Bank - OTC and exchange-traded options
- CMC Markets - OTC forwards and countdowns
- Interactive Brokers - U.S. forex options
- TD Ameritrade FX - U.S. forex options, U.S. residents only
- AvaTrade - OTC options only, great options app
OTC and MTF-listed options
|Tradeable Symbols (Total)||19537|
Regulated and trusted across the globe, IG offers traders the ultimate package of excellent trading and research tools, industry-leading education, competitive pricing, and an extensive list of tradeable products. This fantastic all-round experience makes IG the best overall broker in 2022. Read full review
- Outstanding platforms and tools
- Over 19,000 tradeable instruments
- Competitive pricing
- No predefined layouts on the flagship web platform
- Limited product range on MT4
OTC and exchange-traded options
|Tradeable Symbols (Total)||40000|
For traders who can afford the USD 10,000 minimum deposit (GBP 500 for the U.K.), Saxo Bank offers competitive pricing, excellent trading platforms, brilliant research, reliable customer service, and over 40,000 instruments to trade. Read full review
- Flagship platform is top of the line
- Over 40,000 tradeable instruments
- Excellent customer service
- High minimum deposit
OTC forwards and countdowns
|Tradeable Symbols (Total)||11927|
CMC Markets is a globally trusted broker that delivers a terrific offering for traders thanks to excellent pricing, nearly 10,000 tradeable instruments, and the Next Generation trading platform, which comes packed with quality research, innovative trading tools, and powerful charting. Read full review
- Low trading costs
- Excellent web and mobile platforms
- Robust research materials
- Educational offering could be improved
- MT4 offering limited to 62 symbols
US forex options
|Tradeable Symbols (Total)||7400|
Professional forex and CFD traders seeking a global multi-asset broker will find Interactive Brokers offers a sophisticated, institutional grade trading platform, and competitive fees. Read full review
- Robust platform for professional traders
- Wide range of global markets
- Thorough research offering
- Trader Workstation platform is likely too complicated for inexperienced traders
US forex options, US residents only
|Tradeable Symbols (Total)||N/A|
With over 70 currency pairs to trade alongside a plethora of tools, research, and education, TD Ameritrade's thinkorswim platform provides US-based forex traders the ultimate trading technology experience. Read full review
- Outstanding platform in thinkorswim
- Thorough research offerings
- Excellent educational materials
- Does not offer copy trading
- Forex pricing is slightly higher than industry average
OTC options only, great options app
|Tradeable Symbols (Total)||1260|
AvaTrade is a trusted global brand best known for offering traders an extensive selection of trading platform options. Our testing found AvaTrade to be great for copy trading, competitive for mobile, mostly in line with the industry average for pricing and research, and a winner for investor education. Read full review
- AvaOptions app is an excellent forex options mobile trading platform
- Offers 44 forex options and over 1,200 CFDs
- Pricing for retail accounts is average, but trails industry leaders
- Desktop platform is slow to load, has outdated design
What are forex options?
All forex options are either puts or calls, similar to regular options. Holding a put option conveys the right to sell while holding a call option conveys the right to buy. Like regular options, forex options are a riskier investment.
- The holder (buyer) of a put option has the right to sell the underlying asset at a specified strike price on or before expiration. A put option is a bearish (short) position that profits when the cost of the underlying decreases.
- The holder (buyer) of a call option has the right to purchase the underlying asset at a specified strike price on or before expiration. A call option is a bullish (long) position that profits when the cost of the underlying increases.
The gallery below contains pictures of forex options featured on the best forex options brokers.
Forex options terms to know
Below are seven terms every trader should know before trading forex options:
- Strike Price - The price level the contract can be exercised at (i.e., exercise price)
- Time Value - The portion of the premium represented by any remaining time
- Spot Price - The current market price of the underlying asset
- Premium - The value of time remaining plus any positive difference between spot and strike price
- Break-Even Level - The difference between the Spot price and any time value
- Intrinsic - The positive difference between the strike price and underlying spot price
- Extrinsic - The negative difference between the strike price and the underlying spot price
Different types of forex options
Aside from differences related to where you trade forex options, there are also different forex options types beyond the plain-vanilla options, including more exotic currency options. Here is a basic course on options. Below are examples of varying forex option types:
- Average rate options
- Barrier options (turbo warrants, touch brackets)
- Swaptions (converts to a swap position)
- Currency warrants (long-term options)
- Binary options (Digital 100s)
Why trade forex options?
While not suitable for all investors, options can be attractive to forex traders due to their inherent properties not found in other forex instruments. Below is a list of some of the perceived advantages of why investors trade forex options trading:
- Pre-defined risk when buying options
- No chance of a margin call or getting liquidated (except for Turbo or Barrier options)
- Can be used to offset or fully hedge an existing position
- A combination of options can create highly specific trading strategies
- Have pre-defined time remaining until expiry
- Can be highly risky if selling options with undefined risk or buying low probability out-of-the-money options
What is a forex put option?
A put option is a bearish (short) position that profits when the price of the underlying decreases.
A trader who is expecting the price of the EUR/USD to fall by a specific date may purchase a put option with enough remaining time-value.
What is a forex call option?
A call option is a bullish (long) position that profits when the price of the underlying increases.
A trader who is expecting the price of a currency pair such as the EUR/USD to appreciate by a specific future date may purchase a call option. The option should have enough remaining time-value to cover the trader's forecasted time-horizon for that trade.
What are the different levels of forex options trading?
Selling puts or calls to open a position will generally require considerably more margin than buying puts or calls, and in the US, will require that traders get approved for that level of options trading, across the following four tiers:
- Level one options trading: Default level, includes protective puts and covered calls
- Level two options trading: Buying options (puts or calls)
- Level three options trading: Credit and Debit spreads (defined risk/reward)
- Level four options trading: Naked position (undefined risk)
What are some common strategies for options trading?
Depending on what you are expecting in the market for a given forex pair and time-frame, there are over a dozen popular strategies used to establish an options position with predefined risk in anticipation of specific market behavior related to price direction and volatility, some of which are listed below:
- A combination position includes more than one option in the same contract at the same time.
- A straddle (or strangle) combines writing (or purchasing) both a put and call at the same strike price (or different strike prices) and the same expiration date.
- A spread position is one where you are both the buyer and the writer (seller) of the same type of option, although strike price and expiry dates can be different.
How do forex options differ across brokers?
Forex options are financial assets that may vary in terms of the numerous rules and structures they follow, which can result in various levels of complexity. Below are some of the most common ways forex options differ across brokers:
- Broker or exchange execution policies
- Default contract sizes and specifications
- Type of option styles and products available
- Trading symbols for the same underlying currency
What are exotic forex options?
Some forex options lose value if the underlying spot price touches a barrier level, such as a turbo warrant (known as turbos, or touch brackets).
- For example, if a turbo call option trades at a level below its strike price (i.e., breaking its barrier), it becomes worthless, even if the price recovers before expiration.
- Meanwhile, other forex turbos can have a barrier level that is different than the strike price level. Furthermore, a Turbo may have a barrier that only activates at a specific time, such as after one touch.
Are forex options cash-settled?
Almost all forex options are cash-settled, where no delivery takes place. Thus, it can be convenient to trade these financial instruments in the same way investors trade non-deliverable spot forex (i.e., CFD trading).
Can retail traders buy forex options?
Certain forex brokers will require that you are a professional client to trade options, such as Digital 100’s (binaries). At the same time, other brokers may also offer FX Forwards, in addition to forex options and currency futures, and forex instruments available to retail traders (i.e., CFDs).
Are there risks involved in trading forex options?
All types of forex options trading should be considered high-risk investments. Whether trading out-of-the-money options that have a higher probability of expiring worthless and thus could be deemed “riskier”, or even when trading an option that is deeply in-the-money with lower-probability of expiring worthless. In all cases, forex options are risky, complex financial instruments, and even if you understand them well, they may not be suitable for everyone.
ForexBrokers.com 2022 Overall Ranking
Here are the Overall rankings for the 39 online brokers who participated in our 2022 Annual Review, sorted by Overall ranking.
|Brokers||Commissions & Fees||Offering of Investments||Platforms & Tools||Research||Mobile Trading Apps||Education||Overall Ranking||Trust Score||Visit Site|
|HFM (HF Markets)||85|
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For our 2022 Forex Broker Review we assessed, rated, and ranked 39 international forex brokers over a three-month time period resulting in over 50,000 words of published research.
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About the Author
Steven Hatzakis Steven Hatzakis is the Global Director of Research for ForexBrokers.com. Steven previously served as an Editor for Finance Magnates, where he authored over 1,000 published articles about the online finance industry. Steven is an active fintech and crypto industry researcher and advises blockchain companies at the board level. Over the past 20 years, Steven has held numerous positions within the international forex markets, from writing to consulting to serving as a registered commodity futures representative.