Note (September 2026): An earlier version of this article recommended Pocket Option as a broker. Pocket Option is a binary options platform that the UK FCA lists as unauthorised and the U.S. CFTC has placed on its RED List; the outdated per-trade commission figures have also been corrected.
Online stock trading means buying and selling shares through a broker’s website or app, so you own part of a company. Online options trading means buying contracts that give the right, but not the obligation, to buy (call) or sell (put) a stock at a fixed strike price before an expiration date. Options add leverage and time risk.
Key Takeaways
- A stock is a share of ownership; an option is a derivative contract that usually covers 100 shares and expires on a set date, according to FINRA.
- An option buyer can lose at most the premium paid, while a seller of an uncovered (naked) call faces theoretically unlimited losses.
- Online stock and ETF commissions at large U.S. brokers fell to $0 after Charles Schwab cut its fee in October 2019; options usually carry a per-contract fee, such as Fidelity’s $0.65 as of September 2026.
- Binary options are not the same as exchange-listed options. The UK banned their sale to retail consumers from 2 April 2019, and the FCA says an offer of binary options is probably a scam.
- Pocket Option, which this page once recommended, is on the FCA’s list of unauthorised firms and the CFTC’s RED List, and is named on the RBI’s Alert List in India.
The difference between online stock trading and online options trading becomes clear once you understand what an option is. Many beginners start with ordinary online stock trades, although options trading has grown quickly: the Options Clearing Corporation reported a record 10.38 billion cleared contracts in 2022, and industry reports show volumes setting new records again through 2025. In either case, the more you are aware of what you’re doing, the more effective your chosen approach will be. An outsider to the stock market will gain some understanding of online trading stock and option styles from this article.
Options trading is a separate strategy from buying shares: an option is a derivative, a contract whose value depends on an underlying asset. Options can also be written on underlying assets other than stocks, such as bonds, commodities and real estate.
When you buy an option, you pay a premium for the right, but not the obligation, to buy or sell the underlying asset at a fixed strike price on or before a set expiration date. The cost you spend to purchase the option is not refundable, but you are not required to exercise your right to buy or sell. Hence, you may never actually possess the asset for which you paid for your option.
Call options and put options are the two main types of stock options traded online. With the exception that one is profitable when the stock price rises and the other is profitable when the stock price falls, they function essentially in the same way.
The right to purchase the stock at a specific price and for a specific amount of time is provided by call options. If the stock appreciates, you can purchase it at a discount and sell it for more money. Simply put, you don’t exercise your option if the stock price doesn’t increase. Buying a call is a bullish trade, often called a long call, and the most a call buyer can lose is the premium paid.
Put options, on the other hand, allow you the ability to sell the stock during a specific period at a specific price. As a result, if the stock price falls below the strike price, the put holder can buy shares at the lower market price and exercise the put to sell them at the higher strike price, or sell the put itself, which has gained value. Buying a put is a bearish position, sometimes described as a way to go short, but unlike a short sale the put buyer’s maximum loss is the premium paid.
Three Key Elements of Online Stock and Options Trading
There are several possibilities available to you in the vast online stock and options trading market. Several part-time and casual investors have emerged since the market’s establishment as a result of some markets being simple to access thanks to partnerships with online businesses and internet resources. Several businesses are also beginning to offer both basic and sophisticated services that will suit the market’s traders.
Once you complete your study, you will realise that there is a wealth of information available, so you must exercise caution in selecting your markets, the commodity, and, of course, the financial institution to which you will affix yourself.
The cost per transaction that you will either incur or benefit from after selecting your commodity is one of the elements you must take into consideration when making your investment market decision. When you make a particular number of trades regularly, many online stock companies will reward you with a variety of offers and imaginative schemes.
Commissions have fallen sharply since October 2019, when Charles Schwab cut its online U.S. stock, ETF and options commission from $4.95 to zero and rival brokers followed. As of September 2026, Fidelity, for example, lists $0 for online U.S. stock and ETF trades and $0.65 per options contract. Fees still vary by broker and country, so check the current schedule before you trade. While this may seem like a small sum at first, it will soon build up and have an impact on how you manage your cash.
The amount they charge for each trade is also significant, and the sums might quickly pile up enough to undermine your methods in a matter of weeks. Do not confuse a regulated broker with offshore platforms such as Pocketoption broker (not a regulated stock or options broker). Pocket Option is a binary options platform that the UK Financial Conduct Authority lists as not authorised (warning first published in September 2021 and updated in February 2026), that the U.S. Commodity Futures Trading Commission added to its RED List in July 2022, and that the Reserve Bank of India names on its Alert List of unauthorised forex trading platforms. Such platforms are a poor choice, especially for novice traders who aren’t very familiar with the market and need some time to adjust.
Also, you must affiliate yourself with a reputable business, so you cannot simply pick the first one you come across. You don’t want to be in the position of paying a company a sizable sum of money only to discover that they have been wasting it by making poor investment decisions continuously.
To gain some unprompted client feedback on the items and their services, check with governing resources, and financial organisations that do routine checks on such businesses, and – most of all – examine the feedback system the internet naturally reproduces.
Lastly, you should ensure that the interface you eventually receive is straightforward and user-friendly. You shouldn’t be forced to balance numerous other difficult and complex concerns with the interface system on top of the already challenging task of investing and forecasting market movements.
With these ideas in mind, you can approach online stock and option trading more carefully. No platform or strategy guarantees profits, and a bought option can expire worthless. Readers should not select pocketoption broker as their platform: the FCA says it is not authorised, the CFTC lists it as registration deficient, and traders who use it do not get the protections a regulated broker provides.
What Is the Difference Between Stock Trading and Options Trading?
Stock trading and options trading differ in what you own, how long a position can last, and how much you can lose. A share is part-ownership of a company that you can hold indefinitely. An option is a contract with an expiration date that controls, in the case of standardized U.S. equity options, 100 shares of the underlying stock, according to FINRA.
| Feature | Buying stock | Buying an option |
|---|---|---|
| What you get | Ownership of shares | A right to buy (call) or sell (put) at the strike price |
| Time limit | None; you can hold the shares indefinitely | Expires on a set date |
| Contract size | Any number of shares | Usually 100 shares per standardized U.S. equity option |
| Maximum loss for a buyer | The amount invested | The premium paid |
| Typical online fee at large U.S. brokers (September 2026) | $0 commission | Per-contract fee, for example $0.65 at Fidelity |
| Account approval | Standard brokerage account | Broker must approve the account for a specific options level |
For a wider overview of trading styles, see the different kinds of trading explained, and for the basics of shares, read essential stock market knowledge for new investors.
Key Options Terms Every Beginner Should Know
Options trading uses a small set of terms that appear on every broker’s order screen. FINRA defines them as follows.
- Call option: the right to buy the underlying shares at the strike price. If the buyer exercises, the call seller must sell.
- Put option: the right to sell the underlying shares at the strike price. If the buyer exercises, the put seller must buy.
- Strike price: the fixed price at which the underlying asset can be bought or sold.
- Premium: the price the buyer pays the seller for the option contract.
- Expiration date: the last day the contract can be exercised.
- American-style vs European-style: American-style options can be exercised at any time before expiration; European-style options only on or near the expiration date.
- Assignment: the notice that obliges an option seller to fulfil the contract, which can arrive unexpectedly.
According to Wikipedia’s summary of options history, the Chicago Board Options Exchange opened in 1973 as the first U.S. options exchange, introducing standardized contracts and guaranteed clearing. The Options Clearing Corporation now guarantees fulfilment of exchange-traded U.S. options.
How Much Can You Lose Trading Options?
An option buyer’s maximum loss is the premium paid, because the buyer can simply let the contract expire. An option seller carries more risk: FINRA notes that a seller of an uncovered (naked) call faces theoretically unlimited losses if the stock price keeps rising, and sellers may have to deposit extra margin if a position moves against them.
Because each standardized contract covers 100 shares, a small move in the stock can produce a large percentage gain or loss on the premium. Matching position size to your own tolerance for loss is covered in how to invest based on your risk profile.
How to Start Trading Stocks and Options Online
- Pick a regulated broker. In the U.S., check a broker-dealer on FINRA BrokerCheck; in the UK, use the FCA Firm Checker; in India, confirm the broker is registered with SEBI and, for forex, authorised by the RBI.
- Check investor protection. At a SIPC-member U.S. brokerage, SIPC protects up to $500,000 per customer capacity, including a $250,000 limit for cash, if the firm fails. SIPC does not protect against a fall in the value of your investments.
- Compare fees. Look at stock commissions, the per-contract options fee and any assisted-trade charges; a brokerage fee calculator helps you see the total cost.
- Apply for options approval. FINRA requires brokers to approve an account for a specific level of options trading and to give customers the disclosure document Characteristics and Risks of Standardized Options.
- Start with shares, then simple options. Buying a call or a put has a defined maximum loss; selling uncovered options does not.
- Know when trades settle. Since 28 May 2024, most U.S. securities trades settle one business day after the trade date (T+1), according to the SEC.
How Are Binary Options Different From Stock Options?
A binary option is an all-or-nothing contract: according to the joint CFTC and SEC investor alert, the payout depends entirely on the outcome of a yes/no proposition, such as whether an asset’s price will be above a level at a set time. The holder receives a predetermined amount or nothing. A standard stock option, by contrast, gains or loses value continuously with the price of the underlying shares.
Regulators have restricted binary options heavily:
- Israel: the Knesset approved legislation banning the binary options industry in October 2017.
- European Union: ESMA agreed temporary rules in March 2018 prohibiting the marketing, distribution or sale of binary options to retail clients.
- United Kingdom: the FCA permanently banned the sale, marketing and distribution of binary options to retail consumers from 2 April 2019, and estimated the ban could save consumers up to 17 million pounds a year.
- Australia: ASIC banned the sale of binary options to retail investors in 2021.
- United States: the CFTC and SEC investor alert says binary options can legally be offered only on designated contract markets, and names Cantor Exchange, the Chicago Mercantile Exchange and the North American Derivatives Exchange as those markets at the time it was issued.
Is Pocket Option a Regulated Broker?
No major regulator authorises Pocket Option to serve retail traders in the markets below. Pocket Option is a binary options platform, not a stock or options broker regulated in the U.S., UK or India.
| Regulator | What it says about Pocket Option | Date |
|---|---|---|
| UK Financial Conduct Authority | Not authorised and may be targeting people in the UK; lists pocketoption.com and related domains with a Saint Lucia address | First published 29 September 2021, updated 10 February 2026 |
| U.S. Commodity Futures Trading Commission | Added pocketoption.com to its RED (Registration Deficient) List of unregistered foreign entities | Announced 14 July 2022 |
| Reserve Bank of India | Named on the Alert List of unauthorised forex trading platforms | Listed as of the November 2025 update, as reported by Upstox |
| Israel Securities Authority | Criminal investigation into Israelis promoting the unlicensed platform, covering suspected unlicensed binary options, fraud and money laundering | Reported January 2026 |
The FCA warns that anyone who deals with an unauthorised firm has no access to the Financial Ombudsman Service and no Financial Services Compensation Scheme protection if things go wrong. The CFTC notes that a RED List entry does not by itself mean a court has found a violation. Justwebworld covers a similar case in why the RBI lists Binomo as unauthorised.
Red Flags of an Unregulated Trading Platform
The CFTC, SEC and FCA describe the same warning signs in binary options and offshore trading fraud:
- Withdrawal requests are cancelled, delayed or ignored after a deposit is accepted.
- The platform asks for copies of identity documents and card details without explaining how they are protected.
- Prices or trade countdowns appear to be manipulated so that winning trades turn into losses.
- Heavy advertising on social media and search engines, with promises of unrealistic returns.
- A professional-looking website that claims a local presence while the firm operates from abroad.
- The firm does not appear on the regulator’s register in your country.
What to Do If You Already Deposited Money
- Stop sending money, including any fee demanded to release a withdrawal.
- Keep records: screenshots of the account, emails, chat messages and payment receipts.
- Contact your bank or card provider promptly to ask whether the payment can be disputed.
- Report it. In the UK, contact the FCA on 0800 111 6768 and report fraud to the police through Report Fraud (reportfraud.police.uk). In the U.S., report suspected binary options fraud to the CFTC and SEC, the agencies behind the joint investor alert.
- Beware recovery scams. The FCA warns that victims are often targeted again by people offering to recover lost money for an upfront fee.
Frequently Asked Questions
Is options trading riskier than stock trading?
Options trading is usually riskier than buying shares because options expire and cover 100 shares per standardized contract, which magnifies gains and losses. A bought option can expire worthless, losing the entire premium, while shares can be held through a downturn.
Can you lose more than you invest in options?
An option buyer cannot lose more than the premium paid. An option seller can: FINRA says a seller of an uncovered call faces theoretically unlimited losses, and sellers may face margin calls if a position moves against them.
How many shares does one options contract cover?
One standardized U.S. equity options contract covers 100 shares of the underlying stock, according to FINRA. A premium quoted at $2 therefore costs $200 per contract before fees.
Do online brokers still charge commissions?
Many large U.S. brokers charge $0 commission on online stock and ETF trades, a shift that began when Charles Schwab cut its $4.95 fee to zero in October 2019. Options still carry a per-contract fee, for example $0.65 at Fidelity as of September 2026.
Is Pocket Option legal in the UK, U.S. or India?
Pocket Option is not authorised in any of the three. The UK FCA lists it as an unauthorised firm, the U.S. CFTC placed it on its RED List in July 2022, and India’s RBI names it on its Alert List of unauthorised forex trading platforms.
What does T+1 settlement mean?
T+1 means a trade settles one business day after the trade date. According to the SEC, most U.S. securities trades moved from T+2 to T+1 on 28 May 2024, so shares sold on a Monday settle on Tuesday.
Justwebworld has published guides since 2012. How we write and update articles Report an error
