Interactive Brokers Options Trading

Updated Tuesday, March 15, 2011

Options Trading Grade: B

To get free trades, free cash and other great deals
visit our Discounts and Special Offers page


Interactive Brokers has two trading platforms. The first is a streamlined web application called WebTrader. The second is a more powerful desktop application named Trader Workstation.  WebTrader is good at what it does but only handles basic single leg orders and so is not recommended for those with advanced options trading strategies.  Trader Workstation, on the other hand, is an excellent all around platform.  Entering a basic order from the option trader menu is slightly cumbersome but bearable.  Canceling and modifying open positions is well done. Closing out existing positions from the portfolio tab is well done.  Trade confirmations include transaction time down to the second.  There is a wide selection of advanced option order types and a well done user interface to execute these orders.  We recommend WebTrader for options traders that have only basic needs while we recommend Trader Workstation for experienced options traders.

Option Order Types:

Option order descriptions provided by Interactive Brokers and are only valid for the Trader Workstation platform


Let's start by going through the steps to execute a trade in the WebTrader application and then we will do the same thing in Trader Workstation.

Start by navigating to the Order Management menu, which is found at the bottom of the view in your browser.  By default, the New Order and Stock tabs are selected so switch the the Options tab.  If you do not yet know which contract you want to trade then navigate to the Options tab found at the very top of the application to access the options chains.  From there, clicking on the bid or ask prices for a given contract will load bring you back to the options order entry menu.  Here is a look at an options chain for XOM (Exxon Mobil) (click on images for larger views):

Back back at the order entry menu, we selected to buy 2 contracts of XOM April $80 Calls with a limit price of $3.15 and a time in force of GTC (good until canceled).  Interactive Brokers does not specify the length of time that GTC orders are maintained in their system.  When everything was set we clicked the Preview Order button:

The preview order window showed the trade details and useful margin information.  Everything looked OK so we clicked the Submit Order button:

This action closed the selection box and navigated us to the Orders tab to view our newly submitted order.  We like this automated functionality a lot.

From the Orders tab, open orders can be modified and canceled.  Both actions work as expected.

Once our order executed we could view our newly acquired position by navigating to the Account tab and navigating to the Positions window.  Additional positions of the same security can be opened and existing positions can be closed by clicking on the open or close button listed next to each security.

Doing so brings loads the Order Management window with the contract, action and quantity pre-populated. This is well done.

Trader Workstation
From within the Interactive Brokers desktop application I clicked on the Options Trader button, which brought up the option trader menu.  I then entered the underlying symbol, QQQQ, for the PowerShares NASDAQ index ETF and selected the SMART routing option. After that, I clicked on the options chain strike menu and selected all of the strike prices.  Next, I clicked the button to load chains:

To view a chart on any of the options contracts, users can right click on any contract and select Charts and then New Chart.  This will bring up a new window showing a full screen chart.

Going back to the option trader menu, I found the contract I wanted and clicked on the Ask column, which brought up the order ticket menu.  I entered a limit price of $2.10 and selected to submit the order:

This brought me back to the option trader window with the order section populated.  I clicked on the blue T to submit my order:

Finally, the order confirmation window appeared.  Note that this menu can be disabled, and thus orders do not have to be confirmed before final submission.  I confirmed my order:

An alternative to entering an order using the order ticket menu is to type right in the order management screen.  Submitted orders can be viewed in the pending orders tab.  Modifying and canceling orders from this menu is straight forward and instantly updates the trade status.

Once my order executed I could view it from the portfolio tab.

From this menu, users can sell their positions by right clicking and selecting Close Position.  I did this, which brought up the order ticket window that we saw earlier.  I entered a limit price and submitted the order.

The above example shows how to enter a basic options order.  To execute an advanced options order, click on the Combo icon at the top of the Interactive Brokers application.  This will bring up a separate trading menu with pre-built trading strategies, such as buy write, butterfly and condor.

Related Articles:
Interactive Brokers Review
Interactive Brokers Stock Trading
Interactive Brokers Charts
Interactive Brokers Research Tools
Interactive Brokers iPhone App
Interactive Brokers iPad App
Interactive Brokers Android App